The U.S. Supreme Court case Central Virginia Community College, et al. v. Bernard Katz, Liquidating Supervisor for Wallace's Bookstores, Inc., 2005 revolved around the issue of sovereign immunity in bankruptcy proceedings. The court had to decide whether Congress could use its powers under Article I of the Constitution to abrogate state sovereign immunity in bankruptcy proceedings or if this power was limited only to laws enacted pursuant to Section 5 of the Fourteenth Amendment. In a unanimous decision led by Justice Clarence Thomas, it ruled that Congress did not have such authority under Article I and therefore states retained their sovereign immunity from private suits in federal courts even during bankruptcy proceedings.

In the dissenting opinion for Central Virginia Community College v. Katz, Justice Thomas argued that the majority's decision was inconsistent with historical understanding and interpretation of state sovereign immunity under the 11th Amendment. He contended that states did not surrender their sovereignty when they ratified the Constitution, including their immunity from private suits in federal court. The Bankruptcy Clause does not contain explicit language abrogating this immunity, nor is there evidence to suggest such an intention by those who drafted or ratified it. Furthermore, he disagreed with the majority’s reliance on cases involving Congress’ power over interstate commerce and treaties as these are distinct constitutional provisions which do not necessarily carry implications for bankruptcy proceedings. Lastly, he expressed concern about potential abuse of process if states could be dragged into bankruptcy court against their will by any creditor seeking payment.