In a recent opinion, Casino Caribbean v. Money Centers of America (In re Money Centers of America), Adv. Pro. Case No. 14-50437 (CSS) (Del. Bankr. Feb. 28), U.S. Bankruptcy Judge Christopher Sontchi of the District of Delaware addressed the interesting issue of the applicability and scope of the sovereign immunity of Indian tribes in the context of preference actions brought by a Chapter 11 trustee.
In Money Centers, the Chapter 11 trustee brought preference actions against two casinos that previously had business relationships with the debtors. The casinos were both owned and operated by their respective Indian tribes. The tribes were federally recognized Indian tribes and sovereign nations. The casinos moved to dismiss the actions based on the tribes’ sovereign immunity from lawsuits. The issues before the court were whether the casinos had a sufficient relationship with the Indian tribes to enjoy the tribes’ sovereign immunity; whether Section 106(b) of the Bankruptcy Code abrogated their sovereign immunity; and whether one of the casinos had waived its sovereign immunity by filing a complaint and proof of claim against the debtors’ estates.
