Supreme Court Finds Bankruptcy Code Abrogates Tribal Sovereign Immunity | LexBlog

Case: Lac du Flambeau Band of Lake Superior Chippewa Indians, et al. v. Coughlin (June 15, 2023)

The recent 8-1 decision, the Supreme Court sided with precedent from the First and Ninth Circuits in holding that the Bankruptcy Code abrogates the sovereign immunity of Indian tribes.  The Court interpreted the definition of “governmental unit” in Section 101(27) of the Code to include American Indian tribes, and therefore their sovereign immunity is abrogated in bankruptcy proceedings under Section 106(a) of the Code.  The ability of Indian tribes to file for bankruptcy was not addressed. 

[T]he Coughlin decision means that tribes can be compelled to appear and participate in bankruptcy proceedings as a third party, be targeted by a trustee seeking to recover money paid to the tribe by a debtor, be prohibited from evicting a lessee of tribal lands due to the automatic stay, or be subject to a debtor’s confirmed bankruptcy plan . . .

Source: Supreme Court Finds Bankruptcy Code Abrogates Tribal Sovereign Immunity