Section 106: Waiver of Sovereign Immunity

 

Title 11 of the United States Code - Bankruptcy GENERAL PROVISIONS – CHAPTER 1

Waiver of Sovereign Immunity - Section 106

11 USCS § 106

(a) Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmental unit to the extent set forth in this section with respect to the following:

   (1) Sections 105, 106, 107, 108, 303, 346, 362, 363, 364, 365, 366, 502, 503, 505, 506, 510, 522, 523, 524, 525, 542, 543, 544, 545, 546, 547, 548, 549, 550, 551, 552, 553, 722, 724, 726, 728, 744, 749, 764, 901, 922, 926, 928, 929, 944, 1107, 1141, 1142, 1143, 1146, 1201, 1203, 1205, 1206, 1227, 1231, 1301, 1303, 1305, and 1327 of this title [11 USCS §§ 105, 106, 107, 108, 303, 346, 362, 363, 364, 365, 366, 502, 503, 505, 506, 510, 522, 523, 524, 525, 542, 543, 544, 545, 546, 547, 548, 549, 550, 551, 552, 553, 722, 724, 726, 728, 744, 749, 764, 901, 922, 926, 928, 929, 944, 1107, 1141, 1142, 1143, 1146, 1201, 1203, 1205, 1206, 1227, 1231, 1301, 1303, 1305, and 1327].

   (2) The court may hear and determine any issue arising with respect to the application of such sections to governmental units.

   (3) The court may issue against a governmental unit an order, process, or judgment under such sections or the Federal Rules of Bankruptcy Procedure, including an order or judgment awarding a money recovery, but not including an award of punitive damages. Such order or judgment for costs or fees under this title [11 USCS §§ 101 et seq.] or the Federal Rules of Bankruptcy Procedure against any governmental unit shall be consistent with the provisions and limitations of section 2412(d)(2)(A) of title 28 [28 USCS § 2412(d)(2)(A)].

   (4) The enforcement of any such order, process, or judgment against any governmental unit shall be consistent with appropriate nonbankruptcy law applicable to such governmental unit and, in the case of a money judgment against the United States, shall be paid as if it is a judgment rendered by a district court of the United States.

   (5) Nothing in this section shall create any substantive claim for relief or cause of action not otherwise existing under this title [11 USCS §§ 101 et seq.], the Federal Rules of Bankruptcy Procedure, or nonbankruptcy law.

(b) A governmental unit that has filed a proof of claim in the case is deemed to have waived sovereign immunity with respect to a claim against such governmental unit that is property of the estate and that arose out of the same transaction or occurrence out of which the claim of such governmental unit arose.

(c) Notwithstanding any assertion of sovereign immunity by a governmental unit, there shall be offset against a claim or interest of a governmental unit any claim against such governmental unit that is property of the estate.


Further Understanding Through Case Law

Constitutionality of Bankruptcy

“But laws that regulate economic activity not involving constitutionally protected conduct are subject to a quite lenient test for constitutional sufficiency... The Bankruptcy Code is such a law.”

In re Kelly 841 F.2d 908 (1988) 

Fresh Start From Bankruptcy

“Federal bankruptcy law allows a debtor to exempt some of his property — mainly basic necessities — from the bankruptcy estate. The exemptions can afford the debtor some economic and social stability, which is important to the fresh start guaranteed by bankruptcy… the fresh start guaranteed by bankruptcy, and supported by the exemption scheme, does not entitle a debtor to maintain the lifestyle to which he was accustomed in better times.”

In re Moorehead 283 F.3d 199 (2004)

The Purpose of Bankruptcy Law

“Fundamental purpose of Bankruptcy Act of 1898 was to conserve properties for benefit of debtors and creditors alike or to reduce assets to cash for distribution among creditors.”

In re McGoldrick 121 F.2d 746 (1941)

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