Cent. Va. Cmty. College v. Katz
In Cent. Va. Cmty. College v. Katz, 546 U.S. 356 (2006), the U.S. Supreme Court held that a proceeding initiated by a bankruptcy trustee to set aside preferential transfers by the debtor to state agencies is not barred by sovereign immunity. The Court thereby rejected the sovereign immunity defense advanced by the state agencies.
Justice John Paul Stevens wrote the opinion for the 5-4 court. The state agencies seeking to keep the monies paid to it by the debtor were Virginia institutions of higher education. The dissent was by the conservative wing of the Court, including Justice Anthony Kennedy but not Justice Sandra Day O'Connor, who sided with the majority.