Limiting Non-Debtor Liability Releases in Bankruptcy
This act aims to protect the rights of individuals who have claims against entities other than the debtor in bankruptcy proceedings. It restricts the ability to release these third-party liabilities without the creditor's consent, meaning citizens will have greater assurance that their claims won't be automatically canceled if a company they dealt with goes bankrupt.
Key points
Prohibits the release of liabilities for entities other than the debtor without their explicit consent, protecting creditors.
Limits temporary injunctions against pursuing claims against third parties to 90 days, unless the creditor agrees.
Allows direct appeal to the court of appeals for decisions on temporarily staying claims against third parties.
Introduces the possibility of dismissing a bankruptcy case if the debtor was formed through an asset separation intended to shield liabilities within the last 10 years.
Status:
Expired
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