APRIL 2024 | 39 THE OKLAHOMA BAR JOURNAL involving employment disputes or torts. Essentially, in exchange for bankruptcy protection, tribes would lose much of their sovereignty and control over their revenue streams. To add another layer of difficulty, federal law often prohibits tribes from even structuring their entities in a way that makes them distinct from the tribe. For example, the Indian Gaming Regulatory Act (IGRA) mandates that tribes “have the sole proprietary interest and responsibility for the conduct of any gaming activity.”46 This means that only the tribe itself can own, control and possess an Indian gaming operation, which would undoubtedly satisfy an arm of the tribe analysis. Furthermore, even if the tribe were to successfully argue that its casino was a valid debtor, the IGRA would likely require that equity interests in the casino remain with the tribe – even if the debtor’s more senior creditors were not fully repaid.47 Thus, the IGRA’s propriety interest requirement would directly conflict with the absolute priority rule in Chapter 11 bankruptcy proceedings, which requires that creditors be paid in full before equity can receive anything in a bankruptcy.48 So, “[e]ven if deemed eligible to file for [C]hapter 11, if a tribal debtor cannot propose a plan that conforms with absolute priority – and compliance with the IGRA likely means it cannot – it will be unable to use the bankruptcy system to restructure its debts.”49 Before Coughlin, tribal enterprises may have been able to avoid these issues by presenting themselves as a distinct corporation or LLC. But now, Coughlin will put pressure on courts to consider whether those entities are truly separate from the tribe to be entitled to bankruptcy protection. And tribes will have to decide whether that protection is worth their sovereignty. CONCLUSION Ultimately, Coughlin did not create these issues, but it does expose how the Bankruptcy Code fails to adequately address the treatment of tribal enterprises. To gain bankruptcy protection, tribes must organize and structure their businesses so that they do not look like an “arm of the tribe.” But in doing so, they may lose sovereign immunity for those businesses in non-bankruptcy lawsuits. And even if tribes can successfully argue that their business is a valid debtor, they probably cannot satisfy the conflicting requirements of other federal laws, such as the IGRA. As a result, tribes are left with either a difficult choice to exchange their sovereignty for protection or with no protection at all for some of its most important industries. ABOUT THE AUTHORS Mark A. Craige is a shareholder and director with Crowe & Dunlevy, practicing in insolvency, reorganization and related areas. He served on the board of the American Board of Certification for more than 30 years and is an American Bankruptcy Institute member. He is a fellow of the American College of Bankruptcy, where he recently served as the 10th Circuit’s Regent, is a frequent CLE lecturer, published numerous articles and is a 1998 OBA Earl Sneed Award recipient. Mr. Craige received his B.S., cum laude, from Southeastern Oklahoma State University in 1979 and his J.D. from the TU College of Law in 1981. Logan Hibbs is an Indian law attorney at Crowe & Dunlevy in Tulsa. He represents tribal entities in tribal, state and federal courts and advises tribes on economic development and employment policies. A Choctaw Nation citizen, Mr. Hibbs graduated with honors from the OU College of Law, where he was on the editorial board of the Oklahoma Law Review, inducted into the Order of the Scribes and earned an American Indian Law certificate. Michael McBride III is shareholder and director at Crowe & Dunlevy and chairs the firm’s Indian Law & Gaming Practice Group. He has more than three decades of legal experience and has served as Seminole Nation attorney general, Kaw Nation and Pawnee Nation supreme courts justice, Sac and Fox Nation attorney general and an adjunct settlement judge for the U.S. District Court for the Northern District of Oklahoma. He is a former chair for the Federal Bar Association Indian Law Section, has won numerous awards and served in various leadership roles. He is an author, a regular conference speaker and a former adjunct professor at the TU College of Law. He received his B.A. from Trinity University and his J.D. from the OU College of Law. 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.
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