No official summary available for this bill.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9223 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 9223
To amend title 11, United States Code, to prohibit nonconsensual
release of a nondebtor entity's liability to an entity other than the
debtor, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 30, 2024
Mr. Nadler (for himself, Mr. Cohen, Ms. Norton, Ms. Porter, Mr.
DeSaulnier, and Mr. Johnson of Georgia) introduced the following bill;
which was referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend title 11, United States Code, to prohibit nonconsensual
release of a nondebtor entity's liability to an entity other than the
debtor, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Nondebtor Release Prohibition Act of
2024''.
SEC. 2. PROHIBITION OF NONDEBTOR RELEASES.
(a) In General.--Chapter 1 of title 11, United States Code, is
amended by adding at the end the following:
``Sec. 113. Prohibition of nondebtor releases
``(a) Except as provided in subsection (b) of this section,
subsection (a)(3), (g), (h), or (i) of section 524, section 1201, and
section 1301, the court may not--
``(1) with respect to the liability of an entity other than
the debtor or the estate on, or the liability of property of an
entity other than the debtor or the estate for, a claim or
cause of action of an entity other than the debtor or the
estate--
``(A) approve any provision, in a plan of
reorganization or otherwise, for the discharge,
release, termination, or modification of such
liability; or
``(B) order the discharge, release, termination, or
modification of such liability; or
``(2) with respect to a claim or cause of action of an
entity other than the debtor or the estate against an entity
other than the debtor or the estate, or against property of an
entity other than the debtor or the estate, enjoin--
``(A) the commencement or continuation (including
the issuance or employment of process) of a judicial,
administrative, or other action or proceeding to
assert, assess, collect, recover, offset, recoup, or
otherwise enforce such claim or cause of action; or
``(B) any act to assert, assess, collect, recover,
offset, recoup, or otherwise enforce such claim or
cause of action.
``(b) Nothing in subsection (a) of this section shall affect any
power the court may have--
``(1) to authorize a sale, transfer, or other disposition
of property free and clear of claims or interests;
``(2) to prevent an entity other than the debtor or the
estate from exercising control over or otherwise interfering
with a right or interest (including a claim or cause of action)
that is property of the estate;
``(3) to bar a claim or cause of action for indemnity,
reimbursement, contribution, or subrogation against an entity
that the estate has released from a claim or cause of action
for which the holder of the barred claim or cause of action
also is or may be liable or has or may have secured;
``(4) under applicable nonbankruptcy law, title 28, or the
Federal Rules of Bankruptcy Procedure, with respect to any
claim or cause of action the court is hearing under section
157(a) or 1334(b) of title 28;
``(5) to approve any disposition of a claim or cause of
action of an entity other than the debtor or the estate to
which such entity expressly consents in a signed writing
provided that--
``(A) such consent is given only after clear and
conspicuous notice to such entity of the proposed
disposition in language appropriate for the typical
holder of such claim or cause of action;
``(B) such consent cannot be given by--
``(i) accepting a proposed plan; or
``(ii) failing to accept or reject a
proposed plan, failing to object to a proposed
plan, or any other silence or inaction; and
``(C) treatment of such entity, and any claims or
interests of such entity, under a plan cannot be more
or less favorable by reason of such entity's consent or
failure to consent; or
``(6) to enjoin the commencement or continuation (including
the issuance or employment of process) of a judicial,
administrative, or other action or proceeding against an entity
appointed or employed (or whose appointment or employment was
approved) by or under the auspices of the court, in another
court and without leave of the court, with respect to acts or
omissions for which the entity was so appointed or employed.
``(c) In a case under chapter 11 of this title, no order or decree
temporarily staying or enjoining, pursuant to this title, the
commencement or continuation (including the issuance or employment of
process) of a judicial, administrative, or other action or proceeding
to assert, assess, collect, recover, offset, recoup, or otherwise
enforce a claim or cause of action against an entity other than the
debtor or the estate against an entity other than the debtor or the
estate, or against property of an entity other than the debtor or the
estate, shall extend (or be extended) beyond 90 days after the date of
the order for relief without the express consent of the entity whose
claim or cause of action is stayed or enjoined.
``(d) Nothing in subsection (b) or (c) shall be construed to
authorize relief within the scope of subsection (b) or (c).''.
(b) Clerical Amendment.--The table of sections for chapter 1 of
title 11, United States Code, is amended by adding at the end the
following:
``113. Prohibition of nondebtor releases.''.
SEC. 3. APPEAL OF NONDEBTOR STAYS.
Section 158 of title 28, United States Code, is amended--
(1) in subsection (a), by striking ``The'' and inserting
``Except as provided in subsection (d)(3), the''; and
(2) by inserting after subsection (d)(2) the following:
``(3)(A) The appropriate court of appeals shall have
jurisdiction of appeals from all orders and decrees (whether
interlocutory or final) temporarily staying or enjoining (or
increasing the duration of any temporary stay or injunction of)
the commencement or continuation (including the issuance or
employment of process) of a judicial, administrative, or other
action or proceeding to assert, assess, collect, recover,
offset, recoup, or otherwise enforce a claim or cause of action
of an entity other than the debtor or the estate against an
entity other than the debtor or the estate, or against property
of an entity other than the debtor or the estate, entered in a
case under chapter 11 of title 11 by--
``(i) a bankruptcy judge under section 157 of this
title; or
``(ii) a district court under section 1334 of this
title.
``(B) If an appeal is taken under subparagraph (A), the
stay order or decree shall immediately terminate and dissolve
and be of no further force or effect 90 days after its issuance
by the bankruptcy judge or district court, unless the appeal is
dismissed or the court of appeals affirms the stay order or
decree before that date.''.
SEC. 4. DIVISIONAL MERGERS.
Section 1112 of title 11, United States Code, is amended--
(1) by redesignating subsection (f) as subsection (g); and
(2) by inserting after subsection (e) the following:
``(f) On a request of a party in interest, and after notice and a
hearing, the court shall dismiss a case under this chapter if the
debtor or a predecessor of the debtor was the subject of, or was formed
or organized in connection with a divisional merger or equivalent
transaction or restructuring that--
``(1) had the intent or foreseeable effect of--
``(A) separating material assets from material
liabilities of an entity eligible to be a debtor under
this title; and
``(B) assigning or allocating all or a substantial
portion of those liabilities to the debtor, or the
debtor assuming or retaining all or a substantial
portion of those liabilities; and
``(2) occurred during the 10-year period preceding the date
of the filing of the petition.''.
SEC. 5. RULE OF CONSTRUCTION.
Nothing in this Act, or the amendments made by this Act, shall be
construed to independently grant the court authority to issue nondebtor
releases, injunctions, or stays in connection with an order for relief
under chapter 11 of title 11, United States Code, or in connection with
an order confirming a plan of reorganization, nor shall anything in
this Act or such amendments be construed to imply that any other
provision of title 11 of such Code or of nonbankruptcy law grants such
authority.
SEC. 6. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this Act and
the amendments made by this Act shall take effect on the date of the
enactment of this Act and shall apply to any case under title 11,
United States Code, that is--
(1) pending in bankruptcy as of the date of the enactment
of this Act; or
(2) filed or reopened on or after the date of the enactment
of this Act.
(b) Validity of Final Orders.--Nothing in this Act, or the
amendments made by this Act, shall affect the validity of any final
judgment, order, or decree as applied under section 158 of title 28,
United States Code, entered before the date of the enactment of this
Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on the Judiciary.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line