Tribal Casinos Struggle with Bankruptcy Eligibility

According to Blaine Green, the San Francisco-based head of Pillsbury’s Indian law practice, because of the uncertainty around the issue, sometimes the threat of bankruptcy is more helpful than an actual bankruptcy filing because it motivates each side to agree to a restructuring.

“If a tribe files and it's determined that that tribe has no ability to be a debtor, then arguably the tribe is in a weaker position than before it filed,” Green explained. That factor, in part, has also caused tribes to view filing chapter 11 bankruptcy as risky because of the threat that courts might set a precedent that they are ineligible altogether, he said.

“I suspect that until a federal court makes clear that tribes are ineligible for chapter 11 bankruptcy protection, this is an issue that people will continue to talk about and discuss,” added Green.