Red Lake Nation News - Babaamaajimowinan (Telling of news in different places)

Tribal Immunity Protects The Navajo Times Against Bankruptcy Strong Arm Action


On April 29, 2016, a New Jersey Bankruptcy Court held that the Navajo Times Publishing Company, an economic entity of the Navajo Nation, was entitled to rely on the tribe's sovereign immunity to defeat a bankruptcy trustee's "strong arm" action to avoid and recover preferential transfers brought under sections 547 and 550 of the Bankruptcy Code. Subranni v. Navajo Times Publishing Company, Inc. (In re Star Group Communications, Inc.), Adv. Pro. no. 15-02497-ABA (Bankr. D.N.J. April 29, 2016). While the opinion is unpublished, the decision expands a growing split over whether § 106 of the Bankruptcy Code abrogates sovereign immunity for tribes and their business entities.

The leading case cited in favor of abrogation of Tribal immunity in Bankruptcy cases is Krystal Energy Company v. Navajo Nation, 357 F.3d 1055 (9th Cir. 2004). In Krystal, the Ninth Circuit reasoned that Bankruptcy Code § 106(a) explicitly abrogates the sovereign immunity of all "governmental units," which is defined in Code § 101(27) to mean "United States; State; Commonwealth; District; Territory; municipality; foreign state" any "department, agency or instrumentality" of the foregoing "or other foreign or domestic government." The Krystal court concluded that Indian tribes fall within the catch-all phrase "domestic governments" because they have been described by the Supreme Court as "domestic dependent nations." As governmental units, Indian Nations may find their sovereign immunity is abrogated in Bankruptcy.


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