High Court to Decide State Immunity Bankruptcy Case

[Rose Siding]

WASHINGTON (Reuters) - The U.S. Supreme Court said on Monday it would decide whether Congress can revoke a state's immunity from being sued in bankruptcy proceedings, a case pitting state powers against those of the federal government.

The high court agreed to decide a dispute involving Virginia after failing to resolve the issue last year in a case from Tennessee. The justices will hear arguments and issue a ruling during their term that begins in October.

Virginia officials said conflicting rulings on the issue by U.S. appeals courts have "serious consequences" for the states. The 49 other states supported Virginia's appeal and urged the justices to decide the issue.

At issue is whether the Constitution's bankruptcy clause, which gives Congress the authority to establish uniform bankruptcy laws, also gives it the power to revoke state sovereign immunity in bankruptcy proceedings.

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