No Bonuses in Bankruptcy Act of 2026

[Congressional Bills 119th Congress] [From the U.S. Government Publishing Office] [H.R. 10942 Introduced in House (IH)]

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119th CONGRESS 2d Session H. R. 10942

To amend title 11, 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.

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IN THE HOUSE OF REPRESENTATIVES

October 29, 2026

Ms. Scanlon introduced the following bill; which was referred to the Committee on the Judiciary

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A BILL

To amend title 11, 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.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``No Bonuses in Bankruptcy Act of 2026''.

SEC. 2. AMENDMENTS.

(a) Allowance of Administrative Expenses.--Section 503 of title 11, 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, 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.''.

SEC. 3. EFFECTIVE DATE; APPLICATION OF AMENDMENT.

(a) Effective Date.--Except as provided in subsection (b), this Act and the amendments made by this Act shall take effect on the date of the enactment of this Act. (b) Application of Amendment.--The amendments made by this Act shall apply only with respect to cases commenced under title 11, United States Code, on or after the date of the enactment of this Act. <all>