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Closing 'Unacceptable Loopholes': How Sex Abuse Claimants Could Gain Power In Chapter 11 Bankruptcies

By Ellen Bardash
May 01, 2024

New federal legislation proposes sweeping changes to how bankruptcy courts handle child sexual abuse claims in Chapter 11 proceedings, with supporters claiming the process has become a way for debtors to silence victims and avoid liability.

Reps. Deborah Ross (D-NC) and Claudia Tenney (R-NY) introduced the Bill, called the Closing Bankruptcy Loopholes for Child Predators Act, on April 18.

"It's perhaps the strongest policy statement on these cases that I've seen," Stinson partner Thomas Salerno said. "Essentially, Congress' message here is, for cases in which a debtor is trying to resolve or deal with claims resulting from the sexual abuse of children, you could still file for bankruptcy, but the price went up."

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