To amend title 11, United States Code, to make the filing of a petition for relief under chapter 11 that is objectively futile or in subjective bad faith a cause for dismissal of the case, and for other purposes.
The Ending Corporate Bankruptcy Abuse Act of 2024 would tighten rules around corporate Chapter 11 bankruptcies to prevent companies from using the system strategically to avoid paying creditors. The bill amends federal bankruptcy law to allow courts to dismiss bankruptcy cases that are objectively futile or filed in bad faith, and establishes a 24-month timeline for companies to complete their reorganization plans. It creates presumptions that companies filing for bankruptcy have done so in bad faith if they recently underwent corporate restructuring, transferred significant assets to insiders, or lack a legitimate reorganization purpose, placing the burden on the debtor to prove otherwise. The legislation also protects certain creditors by limiting the automatic stay that normally halts lawsuits against non-bankrupt entities, particularly in cases involving mass tort claims or those affecting 100 or more individuals. The bill would apply to all bankruptcy cases filed or pending after its enactment, though it would not affect bankruptcy plans already finalized before the law takes effect.
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