No Bonuses in Bankruptcy Act of 2026

Limits on bonuses for bankrupt employees

If enacted, the bill would bar bankruptcy courts from allowing or paying bonuses to insiders and many employees of a debtor. It would prevent bonuses for any individual employed by the debtor whose annual rate of compensation exceeds $250,000. For an employee paid $250,000 or less, the bill would bar only the bonus amount that raises annual pay above $250,000. The bill would define "bonus" as extra pay tied to retention, incentive, or reward, but would exclude sales commissions and payments under collective bargaining agreements. "Individual employed by the debtor" would include employees, consultants, and contractors. A trustee could avoid covered bonus payments made within 180 days before the bankruptcy filing. The rule would apply only to title 11 cases commenced on or after the date of enactment.