“Czyzwski v. Jevic Holding Corp.: Supreme Court Revisits the Scope of Bankruptcy Court Equitable Powers”
When may a bankruptcy court exercise its equitable powers in a manner that may be inconsistent with the express provisions of the Bankruptcy Code? In 2014, the Supreme Court decided Law v. Siegel, in which it held that the Bankruptcy Court lacked equitable power to surcharge the debtor’s exempt property, regardless of the debtor’s wrongful or inequitable conduct, in light of an express provision of the Bankruptcy Code, section 522(k), which mandates (with exceptions not relevant under the facts of that case) that exempt property is “not liable for payment of any administrative expense.” Law v. Siegel thus stands for the proposition that the Bankruptcy Court may not exercise its equity power in contravention of an express Bankruptcy Code provision.
In Czyzwski v. Jevic Holding Corp.“Jevic”), the Supreme Court had another opportunity to evaluate the reach of equity powers under the Bankruptcy Code. The Jevic analysis points to considerations that were not highlighted in Law v. Siegel, including the relevance of bankruptcy policies to the analysis and the nature of the proposed action as interim or final relief.