11 U.S.C. § 106 — Waiver of sovereign immunity

(a) Despite any claim of sovereign immunity, a governmental unit's immunity is removed, to the extent described in this subsection, for the following: (1) A long list of specific sections of this title applies to governmental units, covering matters including automatic stay, sales, contracts, claims, avoiding transfers, discharge, and many other bankruptcy provisions. (2) The court may hear and decide any dispute about how those sections apply to governmental units. (3) The court may issue an order, ruling, or judgment against a governmental unit under those sections or the Federal Rules of Bankruptcy Procedure, including a money judgment — but never an award of punitive damages. Any award of costs or fees against a governmental unit under this title or those rules must follow the limits in section 2412(d)(2)(A) of title 28. (4) Enforcing such an order, ruling, or judgment against a governmental unit must follow the ordinary (non-bankruptcy) law that applies to that unit; a money judgment against the United States itself is paid the same way as a judgment from a United States district court. (5) This subsection does not create any new legal claim that wouldn't otherwise exist under this title, the Federal Rules of Bankruptcy Procedure, or other non-bankruptcy law. (b) A governmental unit that files a proof of claim in the case is treated as having waived sovereign immunity for a claim against it that belongs to the bankruptcy estate and arose from the same transaction or event as the governmental unit's own claim. (c) No matter what sovereign immunity a governmental unit asserts, any claim the bankruptcy estate has against that governmental unit may be offset against that unit's own claim or interest in the case.