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New Bicameral Legislation Would Ensure Bad Actors In Bankruptcy Cases Including Purdue Pharma, Boy Scouts of America, USA Gymnastics, and Others Are Held Accountable
Today, United States Senators Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.), and Richard Blumenthal (D-Conn.), and United States Representatives Jerrold Nadler (D-N.Y.) and Carolyn B. Maloney (D-N.Y.) announced legislation to prohibit the use of non-consensual, non-debtor releases that have helped entities and individuals, like members of the Sackler family, escape accountability for wrongdoing through bankruptcy proceedings.
Since Purdue Pharma filed for bankruptcy, the Sackler family has tried to use non-debtor releases, or non-consensual third-party releases, to protect themselves and their assets from lawsuits linked to the opioid crisis. This loophole in bankruptcy law has increasingly been used by bad actors who have not filed for bankruptcy to escape personal accountability for their actions by shielding themselves through a bankruptcy proceeding of another corporation or entity. The Nondebtor Release Prohibition Act of 2021 would virtually eliminate the use of non-consensual, non-debtor releases in private claims and those brought by the government. Non-consensual, non-debtor releases have also been contemplated in other ongoing bankruptcy cases including the USA Gymnastics and Boy Scouts of America bankruptcies. In these cases, victims of sexual assault and abuse have had their cases dragged into bankruptcy courts against their will. This bill would ensure that victims...