Addressing a question of first impression, a divided panel of the U.S. Court of Appeals for the First Circuit has ruled that the U.S. Bankruptcy Code strips Native American tribes of their sovereign immunity.

According to the May 6 majority opinion, the underlying case involves a small payday loan taken by Brian W. Coughlin. He borrowed $1,100 against his paycheck from Lendgreen, a wholly owned subsidiary of the Lac Du Flambeau Band of Lake Superior Chippewa Indians. As a subsidiary, Lendgreen shares in any immunity the Band is afforded, according to the opinion.