Nondebtor Release Prohibition Act of 2021
On July 28, 2021, democrats introduced bicameral legislation in the US Congress, titled the Nondebtor Release Prohibition Act of 2021, in an effort to ensure bad actors in bankruptcy cases—including Purdue Pharma, Boy Scouts of America, USA Gymnastics, and others—are held accountable. The legislation proposes to amend the Bankruptcy Code by adding a section that would essentially prohibit courts from approving the discharge, release, termination, or modification of claims or causes of action belonging to third parties that are not property of the estate. The bill also proposes to prohibit courts from permanently enjoining the commencement or continuation of such claims or causes of action. If the legislation passes, it will become effective from the date of enactment and impact pending and future bankruptcies. [as reported by the American Bankruptcy Institute on 8/5/21]