In re DBSI, Inc.

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11 U.S.C. 106(a)(1)'s abrogation of sovereign immunity "with respect to" 18 U.S.C. 544(b)(1) extends to the derivative “applicable law.” In this case, the Trustee invoked Idaho's Uniform Fraudulent Transfer Act (UFTA) as the "applicable law" to bring an 11 U.S.C. 544(b)(1) adversary action to avoid $17 million in tax payments that debtor fraudulently transferred to the IRS. The panel held that the government could not rely on sovereign immunity to prevent the avoidance of the tax payments at issue. The panel addressed the Trustee's cross-appeal in a concurrently filed memorandum disposition. View "In re DBSI, Inc." on Justia Law