In an 8-1 opinion, the Supreme Court holds that the waiver of sovereign immunity under Section 106(a) does not extend to suits brought by a trustee under state law standing in the shoes of an actual creditor.
A class action in Chicago will decide whether bankruptcy judges have the tools to rectify a single creditor’s violation of the rights of similarly situated debtors.
Most justices seemed inclined to believe that the waiver of sovereign immunity in Section 106(a) does not abrogate the “actual creditor” requirement in Section 544(b)(1).
