Closing Bankruptcy Loopholes for Child Predators Act of 2026

This bill significantly amends title 11 of the U.S. Code to address the misuse of bankruptcy proceedings in cases of child sex abuse. It establishes a specific definition for "sexual abuse of a child" within bankruptcy law, encompassing various federal and similar non-federal offenses where a minor was aggrieved. The legislation aims to enhance victim engagement and financial transparency throughout the bankruptcy process.

Key provisions include requiring courts to hold conferences for victim impact statements within 60 days of the claim deadline, clarifying that these statements are for understanding and not evidence. For 501(c)(3) organizations facing child sex abuse claims, the court must engage an independent forensic accountant to review assets and ensure proper inclusion or exclusion from the estate. Furthermore, the bill limits the sealing of court records, allowing it only to protect the identity of the alleged victim, not to conceal evidence of alleged crimes.

The bill also modifies rules regarding automatic stays and third-party releases. It specifies that the automatic stay does not apply to claims concerning child sex abuse and significantly restricts third-party releases, particularly for 501(c)(3) organizations, requiring affirmative consent from at least 90 percent of voting creditors. Additionally, claims related to child sex abuse are deemed timely filed regardless of state statutes of limitation.

Crucially, the legislation prohibits the discharge of any debt arising from the sexual abuse of a minor if the debtor was directly responsible or acted with gross negligence for the safety of the abused minor, applying to all entity types. It also disallows Subchapter V filings for claims related to child sexual abuse. Amendments to the Federal Rules of Bankruptcy Procedure mandate debtor attendance and document production for examination in child sex abuse reorganization cases.