Tribal Creditor Bound by Bankruptcy Stay, First Circuit Rules

A Native American tribe’s subsidiary is bound to the bankruptcy code’s automatic stay because the code “unequivocally strips tribes” of their sovereign immunity, the First Circuit ruled in a case of first impression.

Debtor Brian Coughlin can enforce the bankruptcy code’s automatic stay against a subsidiary of creditor Lac Du Flambeau Band of Lake Superior Chippewa Indians, the U.S. Court of Appeals for the First Circuit ruled Friday in a 2-1 opinion.

“The Bankruptcy Code unequivocally strips tribes of their immunity,” the opinion, written by Judge Sandra L. Lynch, said.

The opinion reverses a decision of a Massachusetts bankruptcy court ...