Court sides with workers in bankruptcy case over lost wages

AP News
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Posted: Mar 22, 2017 1:26 PM

WASHINGTON (AP) — The Supreme Court on Wednesday sided with hundreds of former workers at a New Jersey trucking company who said they were unfairly denied a claim for lost wages after the company filed for bankruptcy protection.

The justices ruled 6-2 that a bankruptcy court should not have approved a plan allowing Jevic Transportation Inc. to settle other legal claims first, leaving nothing for the workers.

The workers said the bankruptcy plan did not follow traditional rules requiring unpaid wages to be paid ahead of other debts. The company said settlements with lower-ranking creditors are sometimes essential to resolving the bankruptcy process.

The company filed for bankruptcy protection in 2008, two years after it was acquired by a private equity firm in a leveraged buyout. About 1,800 ex-workers are seeking lost wages.

Writing for the court, Justice Stephen Breyer said a bankruptcy court does not have the power to deviate from the basic priority under which creditors are paid in bankruptcy cases without seeking consent from the affected parties.

Justice Clarence Thomas dissented, joined by Justice Samuel Alito. Thomas faulted the workers for changing their arguments after the court decided to hear the case. He said the high court should have allowed other lower courts to more thoroughly consider the "novel" issue of bankruptcy law before the justices weighed in.