What does CONVERSION OR DISMISSAL UNDER CHAPTER 11. of Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026 do?

This section amends Section 1112 of Title 11, the United States Code, concerning conversion or dismissal under Chapter 11 bankruptcy. It modifies the timeframe for conversion or dismissal to 'not later than 24 months after the date of the filing of the petition'. It adds a new subparagraph (Q) to paragraph (4) of subsection (b), allowing for dismissal based on a case being 'objectively futile' or filed 'in subjective bad faith'. The bill establishes presumptions of subjective bad faith if the court determines the debtor 'manufactured the venue for the case'. It creates conclusive presumptions of subjective bad faith if the court finds the filing or continuation aims to gain a tactical advantage, impose undue delay, cap liability to certain creditors, involved a recent divisional merger, involved asset transfers to insiders, or lacks a valid reorganizational purpose. The court must consider the support of an appointed creditors' committee when determining if a debtor lacks a valid reorganizational purpose. The debtor bears the burden of proof in determinations under subsections (g) and (h).

What does LIMITATIONS ON CERTAIN STAYS AND INJUNCTIONS. of Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026 do?

This section amends Section 105 of Title 11 of the United States Code. The amendment adds a new subsection (e) to Section 105. Under the amendment, courts may not issue orders that override or nullify Section 362(b)(27) of Title 11. This limitation applies regardless of provisions in Title 28, the Federal Rules of Bankruptcy Procedure, or other non-bankruptcy law.

What does TECHNICAL AMENDMENTS. of Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026 do?

This section amends several sections of title 11, United States Code, related to bankruptcy. Section 553 is amended to modify references to '362(b)(27)' to '362(b)(28)' in subsections (a)(2)(B)(ii), (a)(3)(C), and (b)(1). Section 1519(f) is amended to replace '(27)' with '(28)'. Section 1521(f) is amended to replace '(27)' with '(28)'.

What does APPLICATION AND RULE OF CONSTRUCTION. of Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026 do?

This Act applies to cases under title 11 of the United States Code that are filed or pending on or after the date of enactment. The Act does not affect the validity of any final judgment or order confirming a plan under chapter 11 of title 11 that was entered before the date of enactment.

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Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026

Q: What does Preamble of Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026 do?

This bill proposes to amend Title 11 of the United States Code, which pertains to bankruptcy. The proposed amendment would allow for the dismissal of a Chapter 11 bankruptcy case if the filing is deemed objectively futile or in subjective bad faith. The bill's stated purpose is to amend Title 11 regarding bankruptcy petitions.

Q: What does SHORT TITLE. of Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026 do?

This bill is formally titled the Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026.

Q: What does AUTOMATIC STAY. of Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026 do?

This section amends Section 362 of Title 11 of the United States Code, which concerns the automatic stay in bankruptcy proceedings. It redesignates existing paragraphs within subsection (b) of Section 362. A new paragraph (27) is inserted to extend the automatic stay to actions against non-debtor entities if the debtor was involved in certain corporate structure changes within four years prior to filing bankruptcy. Paragraph (27) applies when the action relates to a 'protected claim' against the debtor, the estate, or the non-debtor entity. The definition of 'protected claim' includes claims against non-debtor entities related to financial interests, management involvement, insurance provision, or transactions affecting the debtor's financial condition. It also includes claims related to injury, contamination, or loss affecting at least 100 individuals and allegedly caused by the debtor's products or actions. A new paragraph (p) is added to define 'protected claim' and 'related party' for the purposes of paragraph (27). The term 'related party' is defined using the meaning provided in Section 524(g)(4)(A)(iii).

Last updated: 4/20/2026 · Introduced: 4/20/2026

Author: Sheldon Whitehouse (D-RI)

TL;DR (AI)

This bill allows bankruptcy courts to dismiss Chapter 11 cases deemed objectively futile or filed in subjective bad faith, establishing presumptions of bad faith in certain circumstances like manufactured venue or tactical filings.
The bill expands the automatic stay in bankruptcy to protect actions against related parties involved in corporate structure changes within four years prior to filing, particularly those related to claims affecting a large number of individuals.
Courts are prohibited from issuing orders that override or nullify the automatic stay's protection of certain consumer claims, regardless of other legal provisions.

119th Congressin committeeHR. 8393(In Committee)Official page

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