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House Judiciary Committee Announces Series of Hearings on Bankruptcy Reforms

Washington, D.C. - Today, the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law announced it will hold a series of hearings to consider potential reforms to bankruptcy law. The first hearing, entitled "Oversight of the Bankruptcy Code, Part 1: Confronting Abuses of the Chapter 11 System," will take place on Wednesday, July 28th at 10 AM EDT.

"The bankruptcy process is supposed to guarantee a fresh start and a fair deal," said Chairman Jerrold Nadler and Subcommittee Chairman David N. Cicilline. "But too often it is used to protect corporate wrongdoers at the expense of victims, workers, retirees, homeowners, and consumers. Whether you are a victim of the opioid crisis, a survivor of sexual assault, part of a family struggling to keep your home or dragged down by student loans, a worker who relied on your employer’s promise of retirement benefits, or an entrepreneur trying to save your small business, the bankruptcy system should work for all Americans. These hearings will allow us to consider legislation to ensure that the bankruptcy laws function effectively to support the economy, provide a meaningful option of last resort for individuals and businesses, and are not abused to deprive people of their rights."

The hearings will examine potential reforms to both the consumer and commercial bankruptcy systems, including the use of nonconsensual nondebtor releases, student loan bankruptcy, racial disparities in the use of the consumer bankruptcy system, the rights of workers in the bankruptcy process, the role of the U.S. Trustee Program, as well as other potential topics.

The Subcommittee plans to call consumer and commercial bankruptcy experts, individuals affected by the bankruptcy process, and other knowledgeable witnesses to assist with the development of legislation. Among other topics, the first hearing will address:

  • The use of nonconsensual nondebtor releases and preliminary injunctions to immunize responsible parties not in bankruptcy from liability for their wrongful acts;
  • The use of corporate spinoffs and other reorganizations to shield assets from the bankruptcy process;
  • The payment of large executive bonuses by companies in bankruptcy or on the verge of bankruptcy; and

The use of the bankruptcy process as device to reduce wages, slash benefits, and jettison pension obligations.

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