"In the case of In re Santa Ysabel Resort and Casino, the Bankruptcy Court for the Southern District of California heard arguments on September 4, 2012, as to whether the alleged debtor, a tribal casino, was eligible for bankruptcy protection. The court concluded the casino was not an eligible debtor under the Bankruptcy Code.

The casino claimed that it was not a governmental unit, which is excluded as an eligible debtor for purposes of Chapter 11, but an unincorporated company. Opposing creditors and the US Trustee argued that the tribe was merely doing business as the Santa Ysabel Resort and Casino, which was an arm of the tribal government and that it had never been, and did not possess the hallmarks of, an unincorporated company.

The court noted that, while there was some appeal to expanding bankruptcy protection as the casino requested on the grounds that Congress intended such protection to be expansive, the casino failed to meet the characteristics of an unincorporated company as the casino had recently begun describing itself. Accordingly, the court concluded that the tribal casino failed to satisfy its burden of establishing eligibility under section 109 of the Bankruptcy Code."

Get the Story:
Kurt A. Mayr and David L. Lawton: Tribal Casino Bankruptcy? Not yet. (JDSupra 9/6)

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