Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin

In Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, debtor Brian W. Coughlin filed for Chapter 13 bankruptcy in Massachusetts. The Lac du Flambeau Band, a federally recognized tribe that had made a high-interest consumer loan to Coughlin through a tribal lending entity, sought to continue collection efforts and argued that tribal sovereign immunity shielded it from the bankruptcy court's automatic stay. The bankruptcy court and the First Circuit reached different conclusions on whether the Bankruptcy Code abrogated tribal immunity. The Supreme Court granted review and, on June 15, 2023, held that 11 U.S.C. § 106(a) unambiguously abrogates the sovereign immunity of all "governmental units," including Native American tribes. The decision reversed the First Circuit and confirmed that tribal creditors are subject to the automatic stay and other core bankruptcy provisions. Justice Ketanji Brown Jackson authored the majority opinion; Justice Neil Gorsuch dissented.

The Supreme Court reversed the First Circuit and held that the Bankruptcy Code unambiguously abrogates tribal sovereign immunity, so tribes are subject to the automatic stay and other bankruptcy provisions.

Whether the Bankruptcy Code's sovereign immunity abrogation in 11 U.S.C. § 106(a) clearly and unequivocally applies to Native American tribes as "governmental units," thereby subjecting them to the automatic stay.

The ruling limits tribal sovereign immunity in bankruptcy, making tribal lending operations and debt collection subject to federal bankruptcy law. It reinforces uniformity in bankruptcy proceedings while narrowing the circumstances in which tribes can avoid court orders, with significant implications for tribal commercial activities and consumer debtors.