APRIL 2024 | 37 THE OKLAHOMA BAR JOURNAL Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff. had majority control of the company’s board and in the day-to-day operations.22 Finally, even though the entity was created by a tribal ordinance that expressed an intent for the corporation to share the tribe’s immunity, the court believed the parties’ true intentions were to shield the non-Indian partner from legal liability.23 For these reasons, the court held that the payday lending operation was not an arm of the tribe, and therefore, the company and the non-Indian partner could not assert sovereign immunity.24 American Web Loan illustrates how predatory creditors can take advantage of tribal sovereign immunity in an attempt to protect themselves from state laws. This case also provides an example of how courts apply the Breakthrough test to tribal enterprises as creditors. But what about when tribal enterprises enter bankruptcy proceedings as debtors? In perhaps the only case to address this issue, creditors in In re Santa Ysabel Resort and Casino argued that a tribally owned casino could not file for Chapter 11 bankruptcy because it was an arm of the tribe.25 In that case, the tribe’s casino filed for bankruptcy after accruing more than $50 million in debt.26 Although the casino argued that it was separate from the tribe and could file for bankruptcy, several other creditors moved to dismiss the petition, citing loan documents listing the tribe as the obligor as evidence that the casino was an arm of the tribe.27 Ultimately, the court sided with the creditors and dismissed the casino’s bankruptcy petition without an opinion.28 Consequently, the casino was unable to negotiate with its creditors and closed a few years later.29 Beyond this case, few bankruptcy courts, if any, have analyzed whether a tribal debtor is an arm of the tribe and eligible for bankruptcy protection. But, as will be discussed later, Coughlin’s holding that “tribes” are government units will soon invite the question of whether the applicable Bankruptcy Code provisions, such as exclusion from bankruptcy protection, also apply to tribal enterprises. PART II: COUGHLIN’S ABROGATION OF TRIBAL SOVEREIGN IMMUNITY IN BANKRUPTCY LAW Leading up to Coughlin, the 6th and 9th circuits differed on whether §106(a)(1) of the Bankruptcy Code, which abrogates the sovereign immunity of certain “governmental units,” also applied to tribes. The core issue for both courts – and Coughlin – was whether tribes fell within the definition of a “governmental unit” in §101(27).30 On one side of the split, the 9th Circuit in Kyrstal Energy Co. v. Navajo Nation held that §106(a) (1) abrogated tribal immunity.31 Because §106(a)(1) abrogated the immunity of “all governments,” including “domestic governments,” the court believed this abrogation also applied to tribes as “domestic dependent nations.”32 And since Congress abrogated the immunity of essentially any government, the court found this sufficient to find that Congress clearly and unequivocally intended to abrogate tribal sovereign immunity as well.33 In contrast, the 6th Circuit in In re Greektown Holdings, LLC disagreed with the 9th Circuit and held that §106(a)(1) did not abrogate tribal immunity.34 According to the court, listing every other sovereign – except for tribes – in §101(27) did not constitute a clear intent to abrogate tribal immunity. Additionally, Congress knew about the Supreme Court’s clear statement rule when it adopted the Bankruptcy Reform Act of 1978, yet it failed to mention tribes anywhere in the statute.35 So, for these reasons, the 6th Circuit held that Congress did not abrogate tribal immunity in the Bankruptcy Code. In June 2023, the Supreme Court finally resolved this circuit split in Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin.36 In Coughlin, the tribe owned a payday loaning operation that extended a payday loan to Mr. Coughlin.37 Unable to pay his loan and other debts, Mr. Coughlin eventually filed for Chapter 13 bankruptcy, which triggered the automatic stay.38 But when the tribe’s payday lender tried to bypass the automatic stay by attempting to collect some of his assets, Mr. Coughlin filed a motion to enforce the stay and recover damages against the lender and the tribe.39 However, the bankruptcy court dismissed Mr. Coughlin’s motion based on tribal sovereign immunity, and his appeal eventually made its way to the U.S. Supreme Court. The court ultimately sided with Mr. Coughlin and held that §106(a) (1) indeed abrogates tribal sovereign immunity. In determining whether tribes are “governmental unit[s]” under §106(a), the court emphasized the “strikingly broad scope” of the long list of governments in §101(27)’s definition, which included categories of governments ranging from the United States to municipalities, territories, foreign states and domestic governments.40 According to the court, creating such a “comprehensive”
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