This Article will examine the conflict between the Bankruptcy Code and state sovereignty. The Article shows that while state substantive law is extensively incorporated into federal bankruptcy law, the Bankruptcy Code prevails over state sovereign immunity when applying bankruptcy law. In other words, under the present judicial regime, the Bankruptcy Code presents a glaring exception to the otherwise firm rule of state sovereignty.
Part I examines the Bankruptcy Clause and several national bankruptcy statutes, including the current Bankruptcy Code. This discussion includes an explanation of how the Bankruptcy Clause sits within the framework of the Supremacy Clause. Part II discusses the doctrine of state sovereign immunity as embodied in the Eleventh Amendment and as applied in key cases. This part highlights the tension between court majorities that interpret federal powers broadly, and those that favor strict application of Eleventh Amendment immunity. Part III then considers this controversy in the context of national bankruptcy law, where the conflict is particularly sharp and enduring, and the majorities on either side are razor thin. The Article concludes in Part IV with a look at the future of bankruptcy law and state sovereignty under the rule of Katz and suggests that Katz might not be such a radical departure from the Eleventh Amendment after all.
University of San Francisco Law School
University of San Francisco Law Review, Vol. 42, No. 2, pp. 383-426, Fall 2007.
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