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HR8393119th CongressWALLET

Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026

Sponsored By: Representative Sykes, Emilia Strong [D-OH-13]

Introduced

Summary

This bill would tighten Chapter 11 to block strategic or bad-faith bankruptcies and broaden protections for related non-debtor entities. It focuses on earlier case resolution, stronger presumptions against manipulation, and wider automatic stays for affiliates.

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 0 benefits, 0 costs, 2 mixed.

New pause on affiliate lawsuits

This bill would create a new automatic pause on some lawsuits and collection actions against non-debtor affiliates, insurers, officers, or owners. The pause would apply when, within 4 years before the bankruptcy filing, the debtor was formed or changed by a divisional merger, spinoff, corporate restructuring, or similar transaction that affected finances. It would cover defined "protected claims," including suits tied to ownership, management roles, insurance, or involvement in the restructuring, and certain injury, contamination, or product-exposure claims that affect at least 100 people on or after the petition date. Bankruptcy courts would be barred from issuing orders that override this pause. The rule would apply to bankruptcy cases filed or pending on or after enactment.

Tighter rules for Chapter 11 cases

This bill would add new grounds for dismissal or denial of relief in Chapter 11 where a case is objectively futile or filed in subjective bad faith. It would create rebuttable and conclusive presumptions of bad faith for tactics like manufactured venue, tactical litigation advantage, undue delay, or filings meant to cap liability to 2 or more creditors holding protected claims. The bill would use a 4-year lookback for restructurings and for transfers avoidable under avoidance law, and it would put the burden on the debtor to rebut these presumptions. Motions to convert or dismiss would have to be filed not later than 24 months after the petition date. The rules would apply to cases filed or pending on or after enactment.

Sponsors & CoSponsors

Sponsor

Sykes, Emilia Strong [D-OH-13]

OH • D

Cosponsors

  • Rep. Gooden, Lance [R-TX-5]

    TX • R

    Sponsored 4/20/2026

  • Rep. Nadler, Jerrold [D-NY-12]

    NY • D

    Sponsored 4/20/2026

  • Rep. Pou, Nellie [D-NJ-9]

    NJ • D

    Sponsored 8/3/2026

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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