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The Eleventh Amendment preserves the rights of states to assert immunity from suits in federal courts. However, the sovereign immunity states enjoy is not absolute. The exceptions to that immunity generally fall into three categories: a state can expressly consent to suit in federal court by voluntarily invoking jurisdiction of the federal courts; Congress can abrogate states’ immunity from suit by unequivocally expressing its intent to do so per valid constitutional authority; and, by ratifying the U.S. Constitution, the states consented to certain waivers of their sovereign immunity. Section 106 of the Bankruptcy Code sets forth a listing of bankruptcy actions that are not subject to a state’s assertion of the sovereign immunity defense. Until Central Virginia Community College v. Katz, 546 U.S. 356, 378 (2006), issues relating to sovereign immunity of states in bankruptcy cases were generally addressed under the second exception of statutory abrogation. In Katz, the U.S. Supreme Court determined that the third exception to sovereign immunity could encompass the bankruptcy clause found in Article I of the U.S. Constitution and held that the waiver extends to property of the debtor and the in rem jurisdiction of the bankruptcy court.
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By Steven B. Smith and Silvia Stockman
This article explores the competing factors the Bankruptcy Court considered and the rationale underlying its decision to grant the drastic relief of dismissing the NRA’s bankruptcy case.
Obtaining Administrative Claim Status When Doing Business With a Debtor
By By Andrew C. Kassner and Joseph N. Argentina Jr.
How is administrative claim status obtained in a bankruptcy case, and what risks does a service or goods supplier take by continuing to do business with the debtor after commencement of the bankruptcy case?
Trustee Rights and Obligations When Debtor’s Ch. 11 Case Converts to Ch. 7
By Rudolph J. Di Massa Jr. and Drew S. McGehrin
U.S. Bankruptcy Court for the District of Delaware court held that a Chapter 7 trustee was bound by the pre-conversion actions of the debtors, and that the trustee would not be permitted to step into the shoes of the then-dissolved official committee of unsecured creditors to pursue certain causes of action.
Appellate Court Finds Plaintiffs’ Claims Under Section 362 Not Automatically Stayed
By Rudolph J. Di Massa Jr. and Malcolm Bates
Parties holding potential claims against non-debtor third parties that are arguably “related to” the bankruptcy estate must weigh the risks and benefits of actively prosecuting such claims. The mere fact that a bankruptcy trustee could pursue such claims as property of the bankruptcy estate under Section 541 of the Bankruptcy Code will not be enough to argue that such claims are conclusively barred by the automatic stay.
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