Legal Alert - Despite Changing Economic Reality, Federal Court Holds Indian Tribes Have Sovereign Immunity in Bankruptcy, Absent Waiver


by Emily Gildar Wagner

As the Indian gaming industry continues to thrive, Indian tribes are increasingly engaging in other commercial endeavors including banking, construction, energy, telecommunications, manufacturing, retail and more. Based on a long line of Supreme Court precedent, Indian tribes are generally immune from the federal and state laws that regulate and give rise to liability in these industries, absent an express waiver of this immunity. But in recent years, the propriety of tribal sovereign immunity in this changing economic reality has come into question. In particular, federal courts are in disagreement over whether tribal sovereign immunity extends to the bankruptcy context, as highlighted by a recent decision from the United States District Court for Eastern Michigan (District Court).

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