Supreme Court Addresses Indian Tribes and the Automatic Stay in Bankruptcy
The U.S. Supreme Court recently heard a case concerning a federally recognized Indian Tribe and whether the Tribe had to abide by the automatic stay set forth in the Bankruptcy Code. The Court ultimately ruled, in an 8-1 decision, that federally recognized Indian Tribes are subject to the automatic stay and the terms of the Bankruptcy Code. Given that there are six federally recognized Indian Tribes in Florida, it is important for individuals and businesses in West Palm Beach and throughout South Florida to understand the implications of the recent Court decision. Our West Palm Beach bankruptcy attorneys can tell you more.
Bankruptcy Code Abrogates Sovereign Immunity
The case recently decided by the U.S. Supreme Court is Lac du Flambeau Band of Lake Superior Chippewa Indians et al. v. Coughlin (2023). In this case, the Court had to determine whether a federally recognized Indian Tribe is subject to the automatic stay in the Bankruptcy Code as a “governmental unit,” or whether a federally recognized Indian Tribe can violate the automatic stay without consequence.
In this case, a debtor filed for Chapter 13 Bankruptcy. At the time of the bankruptcy filing, the debtor owed $1,100 to a business owned by the Lac du Flambeau Band of Lake Superior Chippewa Indians, which is a federally recognized Indian Tribe. When the debtor filed for bankruptcy, the automatic stay applied to the case, which meant that the business could not continue to make attempts to collect the debt. However, the Tribe argued that it had sovereign immunity, so its (and its businesses) were not subject to the terms of the Bankruptcy Code and the automatic stay specifically.
Bankruptcy Code Abrogates Sovereign Immunity
The Court held that the “Bankruptcy Code unambiguously abrogates the sovereign immunity of all governments, including federally recognized Indian Tribes.”
The Court emphasized that the Bankruptcy Code is clear in expressly abrogating sovereign immunity for any “governmental unit,” meaning that any governmental unit must adhere to the requirements of the Bankruptcy Code, including the automatic stay. The Court determined that a federally recognized Indian Tribe is in fact a “governmental unit” for the purposes of the statute, and that any federally recognized Indian Tribe therefore is subject to the automatic stay and other terms of the Bankruptcy Code.
Contact Our West Palm Beach Bankruptcy Lawyers
As we noted above, there are six federally recognized Indian Tribes in Florida, including the Miccosukee Tribe of Indians of Florida, the Mississippi Band of Choctaw Indians, the Muscogee Creek Indians, the Poarch Band of Creek Indians, the Seminole Nation of Oklahoma, and the Seminole Tribe of Florida. The recent Court decision applies to these federally recognized Indian Tribes, and it also has potential implications for other entities with sovereign immunity in connection with the Bankruptcy Code.
If you have any questions about the recent Court decision, or if you have concerns about a creditor or debt collector adhering to the terms of the automatic stay, a lawyer can help. An experienced West Palm Beach bankruptcy attorney at Kelley Kaplan & Eller can speak with you today.
Sources:
supremecourt.gov/opinions/22pdf/22-227_i426.pdf
fdot.gov/environment/na-website-files/faq.shtm
