Central Virginia Community College v. Katz
Issues
In accordance with the Constitution's Bankruptcy Clause, must states and state government units surrender the sovereign immunity granted to them under the Eleventh Amendment for the purpose of establishing and maintaining uniform Bankruptcy laws?
After filing for chapter 11 bankruptcy, Wallace's Bookstores, Inc., formerly a national, private supplier of college books, filed complaints against four public higher education institutions in Virginia. As Wallace's court appointed a liquidator , Mr. Katz sought to recover money owed by the Virginia Institutions. The Virginia Institutions argue that as a private party, Mr. Katz cannot sue the state or "arms of the state" without abrogating the states' sovereign immunity guaranteed under the Eleventh Amendment. They maintain that without consent, states cannot be sued by private parties. Mr. Katz denies being classified as a private party and argues that Article I's provisions and purpose of uniform bankruptcy laws across states are an exception. This case raises numerous public policy issues relating to funding of public, higher education institutions and debtor/creditor relationships.
Questions as Framed for the Court by the Parties
May Congress use the Article I Bankruptcy Clause, U.S. Const. art. I, ? 8, cl. 4, to abrogate the States' sovereign immunity?
The petitioners, Central Virginia Community College, Virginia Military Institute ("VMI"), New River Community College, and Blue Ridge Community College ("the Virginia Institutions") are public, higher education institutions partially funded by the Commonwealth of Virginia. Brief of Respondent at 1.
Additional Resources
- LII Law about... Bankruptcy