I 
118TH CONGRESS 
2D SESSION 
H. R. 9110 
To amend title 11, United States Code, to make the filing of a petition 
for relief under chapter 11 that is objectively futile or in subjective 
bad faith a cause for dismissal of the case, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 23, 2024 
Mrs. SYKES (for herself, Mr. NADLER, and Mr. GOODEN of Texas) introduced 
the following bill; which was referred to the Committee on the Judiciary 
A BILL 
To amend title 11, United States Code, to make the filing 
of a petition for relief under chapter 11 that is objec-
tively futile or in subjective bad faith a cause for dis-
missal of the case, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Ending Corporate 
Bankruptcy Abuse Act of 2024’’. 
SEC. 2. CONVERSION OR DISMISSAL UNDER CHAPTER 11. 
Section 1112(b) of title 11, United States Code, is 
amended— 
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(1) in paragraph (2)(A), by striking ‘‘within a 
reasonable period of time’’ and inserting ‘‘not later 
than 24 months after the date of the filing of the 
petition’’; 
(2) in paragraph (4)— 
(A) subparagraph (O), by striking ‘‘and’’ 
at the end; 
(B) in subparagraph (P), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(Q) with respect to the dismissal of a case 
under this chapter, the filing of a petition for relief 
or the continuation of a case under this title that 
is— 
‘‘(i) objectively futile; or 
‘‘(ii) in subjective bad faith.’’; and 
(3) by adding at the end the following: 
‘‘(g)(1) For the purpose of subsection (b)(4)(Q), the 
court shall presume that a petition has been filed or that 
a case is continuing under this title in subjective bad faith 
if the court determines that the debtor manufactured the 
venue for the case. 
‘‘(2) The presumption under paragraph (1) may be 
rebutted only based on clear and convincing evidence. 
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‘‘(h)(1) For the purpose of subsection (b)(4)(Q), the 
court shall conclusively presume that a petition has been 
filed or that a case under this title that is continuing in 
subjective bad faith if the court determines that— 
‘‘(A) a purpose or effect of the filing or con-
tinuation is to— 
‘‘(i) gain a tactical litigation advantage; 
‘‘(ii) impose undue delay upon creditors; or 
‘‘(iii) cap the total amount of the liability 
of the debtor to 2 or more creditors holding 
protected 
claims 
(as 
defined 
in 
section 
362(p)(1)) that the debtor or any affiliate has 
property of value sufficient to pay in full as 
those claims would come due; 
‘‘(B) during the 4-year period preceding the 
date of the filing of the petition, the debtor was the 
subject of, or was formed or organized in connection 
with, a divisional merger or similar transaction 
changing the corporate structure of and affecting 
the financial condition of the debtor or an affiliate; 
‘‘(C) during the 4-year period preceding the 
date of the filing of the petition, the debtor engaged 
in a transfer of substantial assets to or for benefit 
of or incurred substantial obligations from or for the 
benefit of any insider or affiliate that, notwith-
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standing subsections (e) through (g) and (j) of sec-
tion 546, is avoidable under section 544(b) or sub-
section (a)(1) or (e) of section 548; or 
‘‘(D) the debtor does not have a valid re-
organizational purpose. 
‘‘(2) In making a determination under paragraph 
(1)(D), the court shall consider and give weight to whether 
any appointed creditors’ committee supports the dismissal 
of the case. 
‘‘(i) In a determination under subsection (g) or (h), 
the debtor shall have the burden of proof.’’. 
SEC. 3. LIMITATIONS ON CERTAIN STAYS AND INJUNC-
TIONS. 
Section 105 of title 11, United States Code, is 
amended by adding at the end the following: 
‘‘(e) Notwithstanding subsection (a) of this section, 
any provision of title 28, the Federal Rules of Bankruptcy 
Procedure, or any applicable nonbankruptcy law, the court 
may not issue any order, process, or judgment that has 
the purpose or effect of overriding or nullifying section 
362(b)(27) of this title.’’. 
SEC. 4. AUTOMATIC STAY. 
Section 362 of title 11, United States Code, is 
amended— 
(1) in subsection (b)— 
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(A) by redesignating paragraphs (27), 
(28), and (29) as paragraphs (28), (29), and 
(30), respectively; and 
(B) by inserting after paragraph (26) the 
following: 
‘‘(27) under subsection (a) of this section, of 
the commencement or continuation, including the 
issuance or employment of process, of a judicial, ad-
ministrative, or other action or proceeding against 
an entity that is not a debtor in a case under this 
title, or any act to obtain or recover property of such 
entity, on account of or with respect to a protected 
claim against such entity, the debtor, or the estate 
(including a protected claim that is property of the 
debtor or the estate against such entity), if, during 
the 4-year period preceding the date of the filing of 
the petition, the debtor was the subject of, or was 
formed or organized in connection with, a divisional 
merger, spinoff, corporate restructuring, or other 
transaction changing the corporate structure of, and 
affecting the financial condition of, the debtor or an 
affiliate;’’; and 
(2) by adding at the end the following: 
‘‘(p) For the purposes of paragraph (27): 
‘‘(1) The term ‘protected claim’ means— 
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‘‘(A) a claim that— 
‘‘(i) is against a nondebtor entity or 
against property of a nondebtor entity that 
is alleged to be directly or indirectly liable 
for a claim described in subparagraph (B) 
against the debtor; and 
‘‘(ii) arises by reason of— 
‘‘(I) the nondebtor entity’s own-
ership of a financial interest in the 
debtor, a past or present affiliate of 
the debtor, or a predecessor in inter-
est of the debtor; 
‘‘(II) the nondebtor entity’s in-
volvement in the management of the 
debtor or a predecessor in interest of 
the debtor or the nondebtor entity’s 
service as an officer, director, or em-
ployee of the debtor or a related 
party; 
‘‘(III) the nondebtor entity’s pro-
vision of insurance to the debtor or a 
related party; or 
‘‘(IV) the nondebtor entity’s in-
volvement in a transaction changing 
the corporate structure, or in a loan 
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or other financial transaction affect-
ing the financial condition, of the 
debtor or a related party, including— 
‘‘(aa) involvement in pro-
viding financing (debt or equity) 
or advice to an entity involved in 
such a transaction; or 
‘‘(bb) acquiring or selling a 
financial interest in an entity as 
part of such a transaction; or 
‘‘(B) a claim— 
‘‘(i) against the debtor or a nondebtor 
entity or property of the debtor or a non-
debtor entity; 
‘‘(ii) relating to injury, contamination, 
damage, or loss, including any claim for 
reimbursement, indemnity, contribution, or 
subrogation; 
‘‘(iii) affecting, directly or indirectly, 
not less than 100 individuals on or after 
the date of the filing of the petition; 
‘‘(iv) allegedly caused, directly or indi-
rectly, by the presence of, or exposure to, 
a product, material, or substance designed, 
marketed, manufactured, sold, modified, 
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extracted, serviced, or in any way used by 
the debtor or the nondebtor entity; and 
‘‘(v) arising, directly or indirectly, 
from acts or omissions, of the debtor, a 
predecessor in interest of the debtor, or a 
past or present affiliate of the debtor. 
‘‘(2) The term ‘related party’ has the meaning 
given the term in section 524(g)(4)(A)(iii).’’. 
SEC. 5. TECHNICAL AMENDMENTS. 
(a) SETOFF.—Section 553 of title 11, United States 
Code, is amended— 
(1) in subsection (a)— 
(A) in paragraph (2)(B)(ii), by striking 
‘‘362(b)(27)’’ and inserting ‘‘362(b)(28)’’; and 
(B) in paragraph (3)(C), ‘‘362(b)(27)’’ 
and inserting ‘‘362(b)(28)’’; and 
(2) in subsection (b)(1), ‘‘362(b)(27)’’ and in-
serting ‘‘362(b)(28)’’. 
(b) RELIEF THAT MAY BE GRANTED UPON FILING 
PETITION FOR RECOGNITION.—Section 1519(f) of title 
11, United States Code, is amended by striking ‘‘(27)’’ 
and inserting ‘‘(28)’’. 
(c) RELIEF THAT MAY BE GRANTED UPON REC-
OGNITION.—Section 1521(f) of title 11, United States 
Code, is amended by striking ‘‘(27)’’ and inserting ‘‘(28)’’. 
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SEC. 6. APPLICATION AND RULE OF CONSTRUCTION. 
This Act and the amendments made by this Act 
shall— 
(1) apply with respect to any case under title 
11, United States Code, filed or pending on or after 
the date of enactment of this Act; and 
(2) not be construed to affect the validity of 
any final judgment or order confirming a plan under 
chapter 11 of title 11, United States Code, that was 
entered before the date of enactment of this Act. 
Æ 
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