Closing Bankruptcy Loopholes for Child Predators Act of 2026

Bill Number

H.R. 8589

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Finance and Financial Sector

Status

Introduced

Latest Action

2026-04-29: Referred to the House Committee on the Judiciary.

Last Updated

2026-05-14T16:54:33Z

AI-Generated Summary

Purpose

The Closing Bankruptcy Loopholes for Child Predators Act of 2026 (H.R. 8589) aims to prevent abusers, organizations, and nonprofits from using bankruptcy laws to avoid responsibility for child sexual abuse claims. It closes loopholes by limiting debt discharges, releases, stays, and sealing of records in these cases.

Key Provisions

• Definition of "sexual abuse of a child" (11 U.S.C. § 101): Covers federal crimes (e.g., under 18 U.S.C. §§ 1589, 1591, 2241(c), etc.), similar state laws, where the victim was a minor at the time.
• Victim impact statements (amends §§ 1101, 1109): In chapter 11 cases, courts must hold a conference within 60 days of claim deadlines to review voluntary statements from victims (written, oral, video, or audio). These describe emotional, physical, or financial harm and are not used as evidence to encourage openness.
• Forensic accounting for nonprofits (§ 541(g)): In cases involving 501(c)(3) tax-exempt organizations (e.g., charities), courts must hire an independent accountant to review assets of the debtor and any non-debtors seeking release.
• Limits on sealing records (amends § 107; Federal Rule of Bankruptcy Procedure 9018): Courts cannot seal evidence of alleged child sexual abuse except to protect victim identity, unless the accused is acquitted.
• No automatic stay (§ 362(b)(2)): Bankruptcy's automatic pause on lawsuits does not apply to child sexual abuse claims.
• Stricter third-party releases and injunctions (§ 524(g)): For nonprofits resolving abuse claims:
• Requires 90% vote by affected creditors (up from 75% in some cases) and affirmative consent from debtor and 90% of voting creditors.
• Third parties must provide info for creditors to decide on releases.
• Applies to identifiable affiliates or groups.
• Timely claims (§ 1111(c)): Child sexual abuse claims are always considered filed on time, ignoring state statutes of limitations (time limits for lawsuits).
• No debt discharge (§ 523): Debtors (individuals, corporations, nonprofits, etc.) directly responsible or grossly negligent (extremely careless) cannot wipe out these debts via any bankruptcy discharge or plan.
• Ban on subchapter V (§ 1181(d)): Small business reorganization cannot be used for child sexual abuse claims.
• Expanded examinations (Federal Rule 2004): In chapter 11 abuse cases, debtor must attend and produce documents on abuse allegations, finances, and responses.

Significant Changes to Existing Law

• New priorities for victims: Introduces victim statements, forensic reviews, and higher voting thresholds (75% → 90%) for trusts/releases in abuse cases.
• Removes protections: Ends automatic stays, debt discharges, easy sealing, and subchapter V for these claims; deems claims timely despite statutes of limitations.
• Targets nonprofits: Special rules for 501(c)(3) entities, including asset audits and consent for non-debtor releases.

Potential Impacts

• Bankruptcy courts: Increased workload, costs (e.g., forensic accountants), and procedures like mandatory conferences/exams.
• Victims/survivors: Easier to pursue claims (no time bars, voice via statements), harder for abusers/orgs to escape liability via bankruptcy.
• Debtors/orgs: Nonprofits and abusers lose key bankruptcy shields (discharges, stays, releases), making reorganization tougher.
• Creditors: More info and voting power on releases; claims protected from dismissal.
• No direct impact on international relations.

Main Stakeholders

• Victims/survivors: Gain protections, input, and recourse.
• Debtors: Individuals, nonprofits (e.g., religious groups, schools), and orgs facing abuse claims.
• Bankruptcy courts/trustees: Handle new duties like audits and conferences.
• Creditors: Other claim holders voting on plans/releases.
• Third parties: Affiliates/non-debtors seeking liability protection.

Notable Implications

• Legal: Shifts bankruptcy from debtor protection to victim priority in abuse cases; may lead to more litigation outside bankruptcy.
• Constitutional: Could raise due process concerns (fair treatment rights) for debtors, but limited to criminal allegations.
• Political: Bipartisan support; addresses institutional abuse scandals by curbing "bankruptcy shields" without broad bankruptcy reform.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Ross, Deborah K. [D-NC-2]

Cosponsors (3)

Rep. Tenney, Claudia [R-NY-24], Rep. Sykes, Emilia Strong [D-OH-13], Rep. De La Cruz, Monica [R-TX-15]

Recent Actions

• 2026-04-29: Referred to the House Committee on the Judiciary.
• 2026-04-29: Introduced in House
• 2026-04-29: Introduced in House

Bill Versions

• Closing Bankruptcy Loopholes for Child Predators Act of 2026 — issued 2026-04-29 — PDF (11 pages)