This is why you will not get an answer to such a question on this forum:
SOVEREIGN IMMUNITY - A doctrine precluding the institution of a suit against the sovereign [government] without its consent. Though commonly believed to be rooted in English law, it is actually rooted in the inherent nature of power and the ability of those who hold power to shield themselves.
In England it was predicated on the concept that "the sovereign can do no wrong", a concept developed and enforced by - guess who? However, since the American revolution explictedly rejected this interesting idea, the American rulers had to come up with another rationale to protect their power. One they came up with is that the "sovereign is exempt from suit [on the] practical ground that there can be no legal right against the authority that makes the law on which the right depends." 205 U.S. 349, 353.
"tatutes waiving the sovereign immunity of the United States must be`construed strictly in favor of the sovereign." McMahon v. United States, 342 U.S. 25, 27 (1951).
11 U.S.C. S 106, "Waiver of Sovereign Immunity," provides:
(a) A governmental unit is deemed to have waived sovereign immunity with respect to any claim against such governmental unit that is property of the estate and that arose out of the same transaction or occurrence out of which such governmental unit's claim arose.
The interest served by federal sovereign immunity (the United States' freedom from paying damages without Congressional consent)
Federal sovereign immunity is readily distinguishable from the states' immunity under the Eleventh Amendment and foreign governments' immunity under the Foreign Sovereign Immunities Act. The latter two doctrines allow one sovereign entity the right to avoid, altogether, being subjected to litigation in another sovereign's courts. Pullman Constr., 23 F.3d at 1169. Similar sovereignty concerns are not implicated by the maintenance of suit against the United States in federal court. Federal sovereign immunity has had such broad exceptions carved out of it that, as Pullman Construction concluded, "Congress, on behalf of the United States, has surrendered any comparable right not to be a litigant in its own courts." Id. In the present day, federal sovereign immunity serves merely to channel litigation into the appropriate avenue for redress, ensuring that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Pullman Constr. at 1168 (quoting Art. I, section 9, cl. 7).
Federal sovereign immunity is a defense to liability rather than a right to be free from trial.
The Supreme Court has ruled that in a case involving the government's sovereign immunity the statute in question must be strictly construed in favor of the sovereign and may not be enlarged beyond the waiver its language expressly requires. See United States v. Nordic Village, Inc., 503 U.S. 30, 33-35 (1992).
Now, as to the bankrupty code:
192 Sovereign Immunity -- 11 U.S.C. § 106(a)
1. Generally
2. Punitive Damages and Attorney Fees
3. Enforcement of Judgments
4. Claims Under the Bankruptcy Rules
5. No New Substantive Claims or Causes of Action
6. Other Governmental Units
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1. Generally.
Section 106(a) now lists those sections of Bankruptcy Code with respect to
which sovereign immunity is abrogated. This listing effectively allows the
assertion of bankruptcy causes of action, but specifically excludes causes
of action belonging to the debtor that become property of the estate under
§ 541.
Unlike the old section 106, which (absent a governmental unit's filing a
proof of claim) only allowed declaratory or injunctive relief with respect
to Bankruptcy Code based causes of action, monetary judgments may now be
entered. The legislative history accompanying the Bankruptcy Reform Act of
1994 states that new § 106(a) "effectively overrule two Supreme
Court cases [Hoffman v. Conn. Dep't of Income Maint., 492 U.S. 96
(1989) and United States v. Nordic Village, Inc., 503 U.S. 30 (1992)]
that had held that the States and Federal Government are not deemed to have
waived their sovereign immunity by virtue of enacting [old] section 106(c)
of the Bankruptcy Code. . . . This amendment expressly provides for a
waiver of sovereign immunity by governmental units with respect to monetary
recoveries as well as declaratory and injunctive relief." 140 Cong. Rec.
H10766 (daily ed. Oct. 4, 1994).
Query: may a third party bring the action? See IRS v. Amoskeag
Bank Shares, Inc. (In re Amoskeag Bank Shares, Inc.), 239 B.R. 653, 658
(D.N.H. 1998) (allowing former employee of debtor to intervene in § 505
action). But see United States v. Zellers (In re CNS, Inc.),
255 B.R. 198 (N.D. Ohio 2000) (Bankruptcy Code's sovereign immunity waiver
does not provide U.S. consent for non-debtor to obtain a binding
determination of his own tax liability, indirectly, by objecting to IRS
claim against debtor; such objection violates Anti- Injunction Act, 26
U.S.C. § 7421).
2. Punitive Damages and Attorney Fees.
Section 106(a)(3) specifically provides that punitive damages may not be
awarded against a governmental unit. See also Taylor v. United
States (In re Taylor), 263 B.R. 139, 153 (N.D. Ala. 2001) (no punitive
damages against U.S. unless Congress explicitly authorizes) (note: on appeal
to 11th Cir.). Section 106(a)(3) also provides that any award of attorney
fees is subject to the hourly rate limitations contained in 28 U.S.C. §
2412(d)(2)(a) (EAJA), and these limitations are applicable to all
governmental units, not just the United States. See also Jove
Eng'g, Inc. v. IRS, 92 F.3d 1539 (11th Cir. 1996) (attorney fee award
must be consistent with EAJA or IRC 7430). But see Brown v. IRS
(In re Brown), 211 B.R. 1020 (Bankr. S.D. Ga. 1997) (IRC 7430 not
applicable because bankruptcy court is not "court of the United States;
award need only be consistent with EAJA, per 106(a)(3), and thus, no need to
exhaust administrative remedies).
3. Enforcement of Judgments.
a. Generally.
Section 106(a)(4) provides that enforcement of any judgment or
order against a governmental unit shall be "consistent with
appropriate nonbankruptcy law applicable to such governmental
unit."
b. Money Judgments Against the United States.
A money judgment against the United States "shall be paid as if
it is a judgment rendered by a district court of the United
States." Such judgments are governed by 28 U.S.C. § 2414.
4. Claims Under the Bankruptcy Rules.
Section 106(a) provides a waiver of sovereign immunity for claims under both
the Bankruptcy Code and under the Federal Rules of Bankruptcy
Procedure. The provisions of Rule 9011 (sanctions) and 9020 (contempt) may
prove to be the most affected by this change. Whether this can result in an
unconstitutional delegation of legislative power (at least for future rules,
which are proposed by the Judicial Conference) remains to be seen.
5. No New Substantive Claims or Causes of Action.
Section 106(a)(5) explicitly provides that no new substantive claim for
relief not otherwise existing under the Bankruptcy Code, the Bankruptcy
Rules or nonbankruptcy law is created. This may prove to be helpful in
instances where debtors seek to assert creative theories not otherwise
cognizable under existing law. In Field v. Montgomery County (In re
Anton Motors, Inc.), 177 B.R. 58 (Bankr. D. Md. 1995), the court found
no waiver of sovereign immunity for a claim under § 544 even though
that section is one for which sovereign immunity has been abrogated by the
1994 amendments. Section 544 only permits the trustee to avoid transfers
"voidable under applicable law by a creditor holding an unsecured claim;" in
other words, it allows a trustee to assume causes of action under state law.
The court found that Maryland law did not authorize such a suit, and §
106(a)(5) does not create any substantive cause of action; therefore, §
106(a) did not abrogate sovereign immunity. See also Taylor v.
United States (In re Taylor), 263 B.R. 139 (N.D. Ala. 2001) (appeal to
11th Cir. pending) (emotional distress damages are not recoverable for
violations of 11 U.S.C. § 525, especially where no supporting medical
evidence was presented; such compensation would be in the nature of punitive
damages which, with respect to the United States, are explicitly
prohibited).
And that is just one of many such federal statutes and codes referencing Sovereign Immunity. In other words, to explore the entire scope of the concept would take at least a year of study at Georgetown. And I don't feel like returning.
