No Bonuses in Bankruptcy Act of 2021

Bill: 117-hr-5554
Sponsor: full_name: Rep. Bustos, Cheri [D-IL-17]
Introduced: 2021-10-12
Policy area: Finance and Financial Sector
Latest action: action_date: 2022-11-01
text: Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law.

Summaries:
action_date: 2021-10-12
action_desc: Introduced in House
text: <p><strong>No Bonuses in Bankruptcy Act of 2021</strong></p> <p>This bill prohibits debtors in bankruptcy proceedings from paying bonuses to certain individuals including insiders (such as relatives) and highly compensated employees. </p>

tv_txt: I 117th CONGRESS 1st Session H. R. 5554 IN THE HOUSE OF REPRESENTATIVES October 12, 2021 Mrs. Bustos (for herself and Mr. Burchett ) introduced the following bill; which was referred to the Committee on the Judiciary A BILL To amend title 11 of the United States Code to prohibit the payment of bonuses to highly compensated individuals employed by the debtor and insiders of the debtor to perform services during the bankruptcy case, and for other purposes.

1. Short title This Act may be cited as the No Bonuses in Bankruptcy Act of 2021 . 2. Amendments (a) Allowance of administrative expenses Section 503 of title 11 of the United States Code is amended by adding at the end the following: (d) (1) Notwithstanding any other provision of this section, there shall neither be allowed nor paid a bonus to— (A) an individual employed by the debtor at an annual rate of compensation exceeding $250,000; (B) an insider of the debtor; or (C) an individual employed by the debtor to the extent that such bonus would cause that individual’s annual rate of compensation to exceed $250,000. (2) For purposes of this subsection, the term bonus means a transfer to, or obligation incurred for the benefit of, an individual employed by the debtor or insider of the debtor as compensation for services in an amount that— (A) is in addition to the existing wages, salary, or base compensation of an insider of the debtor or individual employed by the debtor; and (B) can be construed as a form of retention, incentive, or reward related to the services provided to the debtor by the insider or the individual employed by the debtor. The term bonus does not include a sales commission. Nor does the term bonus include any transfer or obligation pursuant to the terms of a collective bargaining agreement. (3) The term an individual employed by the debtor includes, but is not limited to, an employee, consultant, or contractor. . (b) Preferences Section 547 of title 11 of the United States Code is amended by adding at end the following: (j) Notwithstanding any other provision of this section, the trustee may avoid any transfer of an interest of the debtor in property made within 180 days before the date of the filing of the petition if such transfer is the payment of a bonus of the kind that would be disallowed under subsection (c) or (d) of section 503. . 3. Effective date; application of amendment (a) Effective date Except as provided in subsection (b), this Act and the amendment made by this Act shall take effect on the date of the enactment of this Act. (b) Application of amendment The amendment made by this Act shall apply only with respect to cases commenced under title 11 of the United States Code on or after the date of the enactment of this Act.