[quote=SK in CV]I’m not sure where it says the state’s obligation can be dismissed. The state isn’t even a party to the bankruptcy.

If two parties owe a debt, and one of them is bankrupt, that doesn’t dismiss the other party. I don’t think the bankruptcy judge has the power to dismiss any obligations of the state.[/quote]

The problem is bankruptcy is a federal proceeding and in section 8 of the constitution it says

“To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;”

The federal constitution trumps the state constitution and this bankruptcy proceeding is in federal court not state court.