Native American Tribe Bankruptcy Raises Questions

The laws and guidelines that apply to Native American tribes have been a gray area for many years. As our government has worked to outline ways to protect these tribes and also grant them a level of independence, their efforts have created a gap that leaves several issues unresolved. After one tribe filed for bankruptcy earlier this  month, the courts are having a hard time figuring out exactly what level of jurisdiction they have to rule.

Protecting The Unprotected

The Western Mohegan Tribe of New York applied for official tribe recognition in 1997, but was declined by the federal government. Now in need of bankruptcy protection the tribe’s filing is confusing the court, who has no precedent for handling such a matter.  Several issues regarding bankruptcy laws have since arrived, puzzling the courts and lawmakers as to how to proceed.

Since the filing it has come to light that bankruptcy laws are not clear about how to grant debt protection to recognized Native American tribes and whether or not they can legally do so for those that are unrecognized. The tribes hold sovereign rights that typically exclude them from certain U.S. courts. Further, some of the debts commonly claimed by Native American tribes, such as those related to the operation of a casino, are not guaranteed to be protected under bankruptcy. Tribal ownership laws regarding assets could also complicate the court’s position in a bankruptcy case, making it difficult to find acceptable debt resolution.