In re Supreme Beef Processors Inc.
Oct
19
2006
Ruling
Waiver of sovereign immunity could not be used to create a cause of action that did not exist outside of bankruptcy.
Procedural posture
The District Court for the Eastern District of Texas dismissed the debtor's tort claims against the creditor United States Department of Agriculture as barred by sovereign immunity. On the debtor's appeal, a panel of the Fifth Circuit held that permissive counterclaims could be used as a setoff under 11 U.S.C. § 106(c) as a waiver of sovereign immunity. The case was reconsidered en banc.
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