Abstract
Section 106 of the Bankruptcy Code expressly abrogates the sovereign immunity of governmental units with respect to fifty-nine other provisions of the Code. There are currently two distinct issues splitting circuit courts over the meaning of this provision. First, does section 106 waive the sovereign immunity of the Internal Revenue Service in avoidance actions brought against it by a bankruptcy trustee under section 544(b)? Second, are Native American Indian Tribes “governmental units” within the meaning of section 101(27), such that their sovereign immunity is abrogated to the extent set forth in section 106? Invoking conventional canons of statutory construction, this Article takes the minority position on both issues, arguing that the IRS may not be sued under section 544(b) and that Tribes are not governmental units within the meaning of the Code. Moreover, these issues illustrate a tension between two of bankruptcy’s least contested axioms: (1) creditors with legally similar claims should be treated similarly; and (2) bankruptcy should not adjust nonbankruptcy entitlements unless necessary. A textualist reading suggests that, when it comes to sovereign immunity, the Code cuts this tension by privileging the second axiom over the first. It is for Congress—not the judiciary—to change that if necessary.
Recommended Citation
Deborah L. Thorne & Luke L. Sperduto,
Sovereign Immunity Tests Bankruptcy’s Least Contested Axioms,
39
Emory Bankr. Dev. J.
1
(2023).
Available at:
https://scholarlycommons.law.emory.edu/ebdj/vol39/iss1/1
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