Federal Bankruptcy Court Holds Future Tribal Per Caps Not Subject to Capture by Trustees

Here are the materials in In re Barth (D. Minn. Bkrtcy.):


Debtors Motion for Summary J

Trustee Motion for Summary J

Debtor Response

Trustee Response

An excerpt:

The Debtors are enrolled members of the Lower Sioux Indian Community in the State of Minnesota. Their predominant source of income is monthly per capita payments they receive from Lower Sioux. In these three adversary proceedings, the Chapter 7 trustees seek orders requiring the defendants to turnover post-petition per capita payments they receive from the Lower Sioux Indian Community, claiming that the payments are contingent property rights that existed at filing and constitute 11 U.S.C. § 541(a) property of the bankruptcy estates. The assertion is based on the plaintiffs’ application of Minnesota law to determine the nature of the per capita payments. The defendants claim that the defendants had no property interest in future per capita payments at filing of the bankruptcies. They claim that tribal law, not Minnesota law, is the applicable law and that tribal law specifically provides that tribal members have no property right in future per capita payments. Plaintiffs and defendants agree that summary judgment is appropriate. The Court agrees with the defendants and holds that they had no property rights in future per capita payments at bankruptcy filing and that they are entitled to summary judgment that their bankruptcy estates have no interest in the payments.

The appellate court affirmed the dismissal of the claim against the Lower Sioux Indian Community earlier; we posted materials here.

Bankruptcy Proceeding Involving Lower Sioux Indian Community and Dakota Finance Corporation

The opinion in Bucher v. Dakota Finance Corp; Dietz v. Lower Sioux Indian Community; Bucher v. Lower Sioux Indian Community (B.A.P. 8th Cir) is here.

The issue here is whether the filing of bankruptcy by Tribe members serves to make the debtors’ ongoing revenues from the Tribe available to the respective trustees for the benefit of their creditors. The Bankruptcy Court1 held that both the Tribe and Dakota Finance Corporation are protected by sovereign immunity and dismissed the adversaries as to those parties. The trustees appeal. For the reasons that follow, we affirm.