Section 1 Short title
This Act may be cited as the “Closing Bankruptcy Loopholes for Child Predators Act of 2026”.
Closing Bankruptcy Loopholes for Child Predators Act of 2026
A BILL
To amend title 11 of the United States Code to address misuse of bankruptcy proceedings in cases of child sex abuse, and for other purposes.
Sec. 2 Amendments
Amendments— Title 11, United States Code, is amended—
in section 101—
by redesignating paragraphs (51B), (51C), and (51D) as paragraphs (51C), (51D), and (51E), respectively, and
by inserting after paragraph (51A) the following:
“(51B) The term ‘sexual abuse of a child’ means any act that—
“(A) constitutes a violation of—
“(i) section 1589, 1590, 1591, 2241(c), 2242, 2243, 2251, 2251A, 2252, 2252A, 2260, 2421, 2422, or 2423, 2258, or 2258A, of title 18;
“(ii) section 20341 of title 34; or
“(iii) a non-Federal law that is similar to a law described in clause (i); and
“(B) by reason of the conduct prohibited, a person who, while a minor, was aggrieved.”;”
in section 1109—
by adding at the end of subsection (b) the following:
by adding at the end the following:
“(c) The sole purpose of victim impact statements shall be to increase engagement and understanding between the bankruptcy court and victims or survivors of child sexual assault. To encourage candor, and thus enhance the utility of victim impact statements, the information provided through victim impact statements is not, and shall not be used as, evidence by any person in the case.”
in section 1101—
in paragraph (2) by striking the period at the end and inserting “; and”, and
by adding at end the following:
“(3) “victim impact statement” means a voluntary written, oral, video, or audio statement, submitted to, or presented to the court in the name of the victim or under a pseudonym, describing the emotional, physical, familial, or financial impact suffered as a result of the sexual abuse of the victim who is a creditor of the debtor in a chapter 11 proceeding.”
in section 541 by adding at end the following:
“(g) In all cases regarding debts or other financial liability arising from allegations of sexual abuse of a child and involving debtors that are organizations described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code, the Court shall engage the services of an independent forensic accountant to review the assets and interests of such debtor, and any nondebtor sought to be released from liability in a proposed reorganization plan, and require preparation of a report to assist the Court with ensuring that such assets and interests are properly included or excluded from the estate.”
in section 107—
in subsection (b) by adding at the end the following:
“(4) This subsection shall not apply to cases regarding debts or other financial liability arising from potential liability stemming from allegations of sexual abuse of a child except to the extent necessary to protect the identity and personal information of the individual alleging to have been abused unless the alleged offender is found not guilty of abuse in a court of law.”
by adding at the end the following:
“(d) No court order shall seal any evidence of alleged crimes relating to the sexual abuse of a child other than to protect the identity and personal information of the individual alleging to have been abused unless the alleged offender is found not guilty of abuse in a court of law.”
in section 362(b)(2)(A)—
in clause (iv) by striking “or” at the end;
in clause (v) by adding “or” at the end; and
by adding at end the following:
“(vi) concerning the sexual abuse of a child or related claims;”
in section 524(g)(2)(B)—
in clause (i) by inserting “or relating to the sexual abuse of a child:” after “reorganization”;
after clause (ii) by adding the following:
“(iii) Notwithstanding any provision of law to the contrary, in any case regarding potential debts or other financial liabilities arising from allegations of sexual abuse of a child—
“(I) No third-party release shall be approved by the court without affirmative consent of both the debtor and at least ninety percent of the creditors in interest entitled to vote and who do vote. The court shall ensure that the parties have been given adequate notice and opportunity to provide or withhold such consent.
“(II) Any third-party seeking the benefit of a release under this chapter shall provide sufficient information to allow an average creditor to make an informed decision about the release.”
in clause (ii)—
by striking “subject” and all that follows through “that—” and inserting the following:
by amending subclause (IV)(bb) to read as follows:
“(bb) a separate class or classes of claimants whose claims are to be addressed by a trust described in clause (i) is established and votes, by at least 75 percent of those voting, in favor of the plan or, if the debtor is an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code which has filed a case under chapter 11 of this title to resolve claims alleging sexual abuse of a child, by at least 90 percent of a separate class or classes of the claimants whose claims are to be addressed by a trust described in clause (i).”
by adding at the end of section 524(g)(4)(A)(ii) the following:
“(V) the third party being an affiliate of the debtor.”
by adding at the end of section 524(g)(1)(C) the following:
in section 1111 by adding at the end the following:
“(c) Claims relating to sexual abuse of a child are deemed timely filed regardless of and notwithstanding the State statute of limitation otherwise applicable to the claims”
in section 523(a)(20)—
by designating subsections (b), (c), (d), and (e) as subsections (c), (d), (e), and (f), respectively; and
by adding after subsection (a) the following:
“(b) No debtor shall receive a discharge under section 727, 1141, 1192 [1] 1228(a), 1228(b), or 1328(b) of this title, or qualify for any form of discharge, injunction, or release under a plan of reorganization or otherwise, with respect to any claim or debt arising from the sexual abuse of a minor in instances where such debtor was either responsible for the sexual abuse of a minor directly or acted with gross negligence for the safety of the abused minor(s) at issue. This shall apply to all debtors regardless of whether such debtors are an individual, a corporation. a limited partnership, a nonprofit entity, or any other person or entity seeking relief under this title.”
in section 1181 by adding at the end the following:
“(d) Prohibition on claims related to child sexual abuse—Notwithstanding any other provision of law, no subchapter 5 filings shall be permitted for claims arising from or related to child sexual abuse.”
Clerical amendment— The table of sections for chapter 1 of title 11, United States Code, is amended by adding at the end the following:
Sec. 3 Amendments to the Federal rules of bankruptcy procedure
The Federal Rules of Bankruptcy Procedure (11 U.S.C. app.) are amended—
in rule 2004—
by striking the period at the end of (b)(2)(C) and inserting “; and”;
by adding after (b)(2)(C) the following:
“(D) In a reorganization case under chapter 11 of the Code related to the alleged sexual abuse of a child, the examination shall also relate to the abuse allegations against the debtor and any affiliated entity, remedial policies and responses to those allegations, information on the debtor or an affiliated entity’s finances and financial projections, and any other matter relevant to the case or to the formulation of a plan.”
by adding at the end of subsection (c) the following:
in rule 9018 by adding at the end the following:
“(c) In no respect shall any court order seal any evidence of alleged crimes relating to the sexual abuse of a child other than to protect the identity and personal information of the individual alleging to have been abused unless the alleged offender is found not guilty of abuse in a court of law.”