Bankruptcy, Native American law, Finance, Sovereign Immunity


The Bankruptcy Code (“Code”) exists as a mechanism for good faith debtors to discharge debts and seek a “fresh start” in life and finance. 11 U.S.C. § 106(a) ensures that not only are all debtors treated uniformly, but that all creditors, including governmental creditors which may otherwise enjoy immunity from suit, are equally subject to the jurisdiction of Bankruptcy courts and bound to the provisions of the Code.

However, a recent circuit split has demonstrated one niche yet significant instance in which a debtor may not receive the same treatment as their counterparts. While § 106 contains an express waiver of sovereign immunity of all “governmental units,” several courts have held that its language does not feature the specificity necessary to incorporate Native American tribal entities within this waiver. Under this interpretation, tribal entities are not bound by the Code and can effectively disregard debtor protections contained therein. As a result, debtors residing on or near tribal lands who frequently deal with financial institutions owned or operated by a tribal government may not receive the same treatment of their debts as other debtors. This Article seeks to address the current split in light of the history of tribal sovereignty and recommend Congressional action which ensures uniform treatment for Native American debtors while keeping in mind the historical implications of tribal sovereignty.



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