by UPDATE: The Supreme Court has since ruled on this case. Click here to read our discussion of their ruling.
On April 24, 2023 the Supreme Court heard oral arguments in the case of In re Coughlin, Case No. 22-227. The question presented is whether the Bankruptcy Code expresses unequivocally Congress’s intent to abrogate the sovereign immunity of Indian tribes. This is an appeal from the First Circuit decision in Coughlin v. LAC Du Flambeau Band (In re Coughlin), 33 F.4th 600 (1st Cir. 2022).
The 1st Circuit held that the Bankruptcy Code abrogates tribal sovereign immunity. At issue was the enforcement of the automatic stay on a pay day loan from Lendgreen, a subsidiary of the Lac Du Flambeau Band of Lake Superior Chippewa Indians.
“Two of our sister circuits have already considered the question and reached opposite conclusions. Compare Krystal Energy Co. v. Navajo Nation, 357 F.3d 1055, 1061 (9th Cir. 2004) (holding that the Code abrogates immunity), with In re Greektown Holdings, LLC 917 F.3d 451, 460- 61 (6th Cir. 2019) (holding that the Code does not abrogate immunity), cert. dismissed sub nom. Buchwald Cap. Advisors LLC v. Sault Ste. Marie Tribe, 140 S. Ct. 2638 (2020). Like the Ninth Circuit, we hold that the Bankruptcy Code unequivocally strips tribes of their immunity.”
NACBA and NCBRC submitted an amici curiae brief along with Legal Aid Chicago and the Hon. Judith Fitzgerald, Hon. Joan Feeney, Hon. Phillip Shefferly, Hon. Eugene Wedoff, Hon. Steven Rhodes and the Hon. Carol Kenner. The brief was submitted by Daniel J. Bussel of KTBS Law LLP and G. Eric Brunstad, Jr. of Dechert LLP.
Observers of the oral argument indicate that the court may be skeptical that Native American tribes are exempt from the automatic stay of the Bankruptcy Code. See Justices dubious of creating “extra-special super-super clear statement rule” to exempt tribes from obligation to respect bankruptcy process – SCOTUSblog.
A decision is expected in late June or early July 2023.