Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026
Sponsored By: Senator Whitehouse, Sheldon [D-RI]
Introduced
Summary
**This bill would tighten Chapter 11 to *curb abusive Chapter 11 filings*.** It would add new presumptions and evidentiary standards to stop objectively futile or subjectively bad-faith cases and expand protections for nondebtor affiliates tied to certain pre-filing restructurings.
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 0 benefits, 0 costs, 2 mixed.
Lawsuits blocked against related companies
If enacted, the bill would add a new automatic stay that can block lawsuits or recovery actions against companies that are not the bankrupt debtor. The stay would apply when the debtor was created in, or was the subject of, a divisional merger, spinoff, corporate restructuring, or similar transaction within four years before the bankruptcy filing. "Protected claims" would include claims tied to ownership, management, insurance, or participation in those transactions, and claims for injury, contamination, damage, or loss that affect at least 100 people. The bill would bar courts from issuing orders that override or nullify this new nondebtor stay.
Stricter Chapter 11 dismissal rules
If enacted, the bill would add a new reason to dismiss or convert Chapter 11 cases when a filing is objectively futile or is filed or continued in subjective bad faith. Courts would presume bad faith if a debtor manufactured venue unless the debtor rebuts that presumption by clear and convincing evidence. The bill would direct courts to conclusively presume bad faith in specific situations, including using a filing to gain litigation advantage or certain divisional mergers or avoidable insider transfers within four years before the petition. The bill would also require motions to dismiss or convert under the main timing rule to be filed within 24 months after the petition.
Sponsors & CoSponsors
Sponsor
Whitehouse, Sheldon [D-RI]
RI • D
Cosponsors
Sen. Hawley, Josh [R-MO]
MO • R
Sponsored 4/20/2026
Sen. Durbin, Richard J. [D-IL]
IL • D
Sponsored 4/20/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov