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Bankruptcy Deals Decried by Workers Get High Court Review

  • ‘Structured dismissals’ single out some creditors for recovery
  • Some U.S. states say loophole lets debtors avoid tax payments
The U.S. Supreme Court is seen on June 27, 2016, in Washington.

The U.S. Supreme Court is seen on June 27, 2016, in Washington.

Photographer: MANDEL NGAN/AFP/Getty Images
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The U.S. Supreme Court will review a bankruptcy strategy that lets select creditors jump the repayment line, sometimes at the expense of parties otherwise entitled to some recovery.

The dispute taken up by the court involves “structured dismissals,” in which a company agrees to pay off one group of creditors but not others that have the same priority. The bankruptcy is then dismissed.