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39 Emory Bankr. Dev. J. 1 (2023)

handle is hein.journals/bnkd39 and id is 1 raw text is: SOVEREIGN IMMUNITY TESTS BANKRUPTCY'S LEAST CONTESTED AXIOMS Deborah L. Thorne* Luke L. Sperduto** 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. United States Bankruptcy Judge for the Northern District of Illinois. The views expressed here are strictly personal views which have no bearing on any pending or future matters before the Bankruptcy Court for the Northern District of Illinois. ** Corporate Restructuring Associate at Skadden, Arps, Slate, Meagher & Flom (UK) LLP. The views expressed here are strictly personal views which do not reflect those of Skadden, Arps or its partners or affiliates. The authors thank the editorial team at the Emory Bankruptcy Developments Journal for their help, Professor Douglas Baird for his generosity, Judge Martin Barash for his support, Lauren Spungen for her insights, and Gabrielle Pilgrim, Brittany Dinkins, and Conner Ahler for valuable research assistance. All errors are our own.

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