Consumer Protection and Corporate Accountability in Bankruptcy Act of 2026

This bill significantly amends the Bankruptcy Code to address perceived abuses in Chapter 11 filings by allowing for case dismissal if the petition is objectively futile or filed in subjective bad faith. It also mandates that a Chapter 11 plan be filed not later than 24 months after the petition date.

The legislation establishes several presumptions for subjective bad faith to guide these dismissals. A court shall presume bad faith if the debtor manufactured the venue, a presumption rebuttable only by clear and convincing evidence. Conclusive presumptions of bad faith arise if the filing's purpose is to gain a tactical litigation advantage, impose undue delay on creditors, or cap liability for certain protected claims when the debtor has sufficient assets. Such presumptions also apply if the debtor was involved in a divisional merger or corporate restructuring within four years prior to filing, or engaged in substantial avoidable asset transfers to insiders or affiliates during that period.

Additionally, the bill introduces a new exception to the automatic stay, permitting actions against non-debtor entities for specific "protected claims" when the debtor was involved in a corporate restructuring within four years. "Protected claim" is broadly defined to include claims against non-debtor entities arising from their ownership, management, or involvement in corporate structure changes, or claims relating to injury or loss affecting at least 100 individuals caused by the debtor's or non-debtor's product. These amendments apply to all bankruptcy cases filed or pending on or after the Act's enactment.