Application of the Bankruptcy Code to Indian Tribes

Parent Category: Basic Needs

Category: Economic Issues

Alexander Hogan

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Alexander Hogan

excerpted from:  Alexander Hogan, Protecting Native American Communities by Preserving Sovereign Immunity and Determining the Place of Tribal Businesses in the Federal Bankruptcy Code, 43 Columbia Human Rights Law Review 569 (Spring, 2012)(172 footnotes omitted)(Student Note)

In most contexts, bankruptcy provides a level of certainty to both creditors and debtors by establishing recourse for debtor insolvency. Specifically, a debtor may file for bankruptcy or creditors may force a debtor into involuntary bankruptcy. This certainty, however, is not present when dealing with Indian tribes. Because the status in the Federal Bankruptcy Code is unclear, interactions between Indian businesses and creditors are complicated and could be a point of concern if ongoing problems in the financial markets make default by Indian borrowers more likely. Like attacks to the immunity doctrine, the uncertainty surrounding the Bankruptcy Code is a threat to Indian businesses. A solution to both problems must be found in order to remove barriers to Indian businesses.

This Part will first describe the different entities that conduct business on Indian land. The next section will discuss the goals of the bankruptcy system. A brief overview of the Bankruptcy Code will highlight the various chapters under which debtors may file for bankruptcy. Then, the next section will explore the application of these chapters to Indian tribes to determine whether Indian tribes can file for bankruptcy. After concluding that Indian tribes are ineligible to file for bankruptcy under existing bankruptcy statutes and describing the consequences of their inability to file, this Part will discuss equity and policy reasons why Indian tribes should be able to file for bankruptcy.