II 

117TH CONGRESS 

1ST SESSION S. 2497 

To amend title 11, United States Code, to prohibit nonconsensual release 

of a nondebtor entity’s liability to an entity other than the debtor, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 28, 2021 

Ms. WARREN (for herself, Mr. DURBIN, and Mr. BLUMENTHAL) introduced 

the following bill; which was read twice and referred to the Committee 

on the Judiciary 

A BILL 

To amend title 11, United States Code, to prohibit nonconsensual release of a nondebtor entity’s liability to 

an entity other than the debtor, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Nondebtor Release 

5 Prohibition Act of 2021’’. 

6 SEC. 2. PROHIBITION OF NONDEBTOR RELEASES. 

7 (a) IN GENERAL.—Chapter 1 of title 11, United 

8 States Code, is amended by adding at the end the fol9 lowing: 


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1 ‘‘§ 113. Prohibition of nondebtor releases 

2 ‘‘(a) Except as provided in subsection (b) of this sec3 tion, subsections (a)(3), (g), (h), or (i) of section 524, sec4 tion 1201, and section 1301, the court may not— 

5 ‘‘(1) with respect to the liability of an entity 

6 other than the debtor or the estate on, or the liabil7 ity of property of an entity other than the debtor or 

8 the estate for, a claim or cause of action of an entity 

9 other than the debtor or the estate— 

10 ‘‘(A) approve any provision, in a plan of 

11 reorganization or otherwise, for the discharge, 

12 release, termination, or modification of such li13 ability; or 

14 ‘‘(B) order the discharge, release, termi15 nation, or modification of such liability; or 

16 ‘‘(2) with respect to a claim or cause of action 

17 of an entity other than the debtor or the estate 

18 against an entity other than the debtor or the estate, 

19 or against property of an entity other than the debt20 or or the estate, enjoin— 

21 ‘‘(A) the commencement or continuation 

22 (including the issuance or employment of proc23 ess) of a judicial, administrative, or other action 

24 or proceeding to assert, assess, collect, recover, 

25 offset, recoup, or otherwise enforce such claim 

26 or cause of action; or 


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1 ‘‘(B) any act to assert, assess, collect, re2 cover, offset, recoup, or otherwise enforce such 

3 claim or cause of action. 

4 ‘‘(b) Nothing in subsection (a) of this section shall 

5 affect any power the court may have— 

6 ‘‘(1) to authorize a sale, transfer, or other dis7 position of property free and clear of claims or inter8 ests; 

9 ‘‘(2) to prevent an entity other than the debtor 

10 or the estate from exercising control over or other11 wise interfering with a right or interest (including a 

12 claim or cause of action) that is property of the es13 tate; 

14 ‘‘(3) to bar a claim or cause of action for in15 demnity, reimbursement, contribution, or subroga16 tion against an entity that the estate has released 

17 from a claim or cause of action for which the holder 

18 of the barred claim or cause of action also is or may 

19 be liable or has or may have secured; 

20 ‘‘(4) under applicable nonbankruptcy law, title 

21 28, or the Federal Rules of Bankruptcy Procedure, 

22 with respect to any claim or cause of action the 

23 court is hearing under section 157(a) or 1334(b) of 

24 title 28; 


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1 ‘‘(5) to approve any disposition of a claim or 

2 cause of action of an entity other than the debtor or 

3 the estate to which such entity expressly consents in 

4 a signed writing provided that— 

5 ‘‘(A) such consent is given only after clear 

6 and conspicuous notice to such entity of the 

7 proposed disposition in language appropriate 

8 for the typical holder of such claim or cause of 

9 action; 

10 ‘‘(B) such consent cannot be given by— 

11 ‘‘(i) accepting a proposed plan; or 

12 ‘‘(ii) failing to accept or reject a pro13 posed plan, failing to object to a proposed 

14 plan, or any other silence or inaction; and 

15 ‘‘(C) treatment of such entity, and any 

16 claims or interests of such entity, under a plan 

17 cannot be more or less favorable by reason of 

18 such entity’s consent or failure to consent; or 

19 ‘‘(6) to enjoin the commencement or continu20 ation (including the issuance or employment of proc21 ess) of a judicial, administrative, or other action or 

22 proceeding against an entity appointed or employed 

23 (or whose appointment or employment was ap24 proved) by or under the auspices of the court, in an25 other court and without leave of the court, with reVerDate Sep 11 2014 04:39 Jul 31, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2497.IS S2497

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1 spect to acts or omissions for which the entity was 

2 so appointed or employed. 

3 ‘‘(c) In a case under chapter 11 of this title, no order 

4 or decree temporarily staying or enjoining, pursuant to 

5 this title, the commencement or continuation (including 

6 the issuance or employment of process) of a judicial, ad7 ministrative, or other action or proceeding to assert, as8 sess, collect, recover, offset, recoup, or otherwise enforce 

9 a claim or cause of action against an entity other than 

10 the debtor or the estate against an entity other than the 

11 debtor or the estate, or against property of an entity other 

12 than the debtor or the estate, shall extend (or be extended) 

13 beyond 90 days after the date of the order for relief with14 out the express consent of the entity whose claim or cause 

15 of action is stayed or enjoined. 

16 ‘‘(d) Nothing in subsection (b) or (c) shall be con17 strued to authorize relief within the scope of subsection 

18 (b) or (c).’’. 

19 (b) CLERICAL AMENDMENT.—The table of sections 

20 for chapter 1 of title 11, United States Code, is amended 

21 by adding at the end the following: 

‘‘113. Prohibition of nondebtor releases.’’. 

22 SEC. 3. APPEAL OF NONDEBTOR STAYS. 

23 Section 158 of title 28, United States Code, is 

24 amended— 


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1 (1) in subsection (a), by striking ‘‘The’’ and in2 serting ‘‘Except as provided in subsection (d)(3), 

3 the’’; and 

4 (2) by inserting after subsection (d)(2) the fol5 lowing: 

6 ‘‘(3)(A) The appropriate court of appeals shall 

7 have jurisdiction of appeals from all orders and de8 crees (whether interlocutory or final) temporarily 

9 staying or enjoining (or increasing the duration of 

10 any temporary stay or injunction of) the commence11 ment or continuation (including the issuance or em12 ployment of process) of a judicial, administrative, or 

13 other action or proceeding to assert, assess, collect, 

14 recover, offset, recoup, or otherwise enforce a claim 

15 or cause of action of an entity other than the debtor 

16 or the estate against an entity other than the debtor 

17 or the estate, or against property of an entity other 

18 than the debtor or the estate, entered in a case 

19 under chapter 11 of title 11 by— 

20 ‘‘(i) a bankruptcy judge under section 157 

21 of this title; or 

22 ‘‘(ii) a district court under section 1334 of 

23 this title. 

24 ‘‘(B) If an appeal is taken under subparagraph 

25 (A), the stay order or decree shall immediately terVerDate Sep 11 2014 04:39 Jul 31, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2497.IS S2497

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1 minate and dissolve and be of no further force or ef2 fect 90 days after its issuance by the bankruptcy 

3 judge or district court, unless the appeal is dis4 missed or the court of appeals affirms the stay order 

5 or decree before that date.’’. 

6 SEC. 4. DIVISIONAL MERGERS. 

7 Section 1112 of title 11, United States Code, is 

8 amended— 

9 (1) by redesignating subsection (f) as sub10 section (g); and 

11 (2) by inserting after subsection (e) the fol12 lowing: 

13 ‘‘(f) On a request of a party in interest, and after 

14 notice and a hearing, the court shall dismiss a case under 

15 this chapter if the debtor or a predecessor of the debtor 

16 was the subject of, or was formed or organized in connec17 tion with a divisional merger or equivalent transaction or 

18 restructuring that— 

19 ‘‘(1) had the intent or foreseeable effect of— 

20 ‘‘(A) separating material assets from mate21 rial liabilities of an entity eligible to be a debtor 

22 under this title; and 

23 ‘‘(B) assigning or allocating all or a sub24 stantial portion of those liabilities to the debtor, 


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1 or the debtor assuming or retaining all or a 

2 substantial portion of those liabilities; and 

3 ‘‘(2) occurred during the 10-year period pre4 ceding the date of the filing of the petition.’’. 

5 SEC. 5. RULE OF CONSTRUCTION. 

6 Nothing in this Act, or the amendments made by this 

7 Act, shall be construed to independently grant the court 

8 authority to issue nondebtor releases, injunctions, or stays 

9 in connection with an order for relief under chapter 11 

10 of title 11, United States Code, or in connection with an 

11 order confirming a plan of reorganization, nor shall any12 thing in this Act or such amendments be construed to 

13 imply that any other provision of title 11 of such Code 

14 or of nonbankruptcy law grants such authority. 

15 SEC. 6. EFFECTIVE DATE. 

16 (a) IN GENERAL.—Except as provided in subsection 

17 (b), this Act and the amendments made by this Act shall 

18 take effect on the date of the enactment of this Act and 

19 shall apply to any case under title 11, United States Code, 

20 that is— 

21 (1) pending in bankruptcy as of the date of the 

22 enactment of this Act; or 

23 (2) filed or reopened on or after the date of the 

24 enactment of this Act. 


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1 (b) VALIDITY OF FINAL ORDERS.—Nothing in this 

2 Act, or the amendments made by this Act, shall affect the 

3 validity of any final judgment, order, or decree as applied 

4 under section 158 of title 28, United States Code, entered 

5 before the date of the enactment of this Act. 

Æ 


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