House Judiciary Committee to Markup Nondebtor Release Prohibition Act of 2021

Oct 22, 2021
Press Release
Legislation Would Ensure Bad Actors In Bankruptcy Cases Are Held Accountable

Washington, D.C. - On Wednesday, October 27th at 10:00 AM EDT, the House Judiciary Committee will markup H.R. 4777, the Nondebtor Release Prohibition Act of 2021, legislation introduced by Chairman Jerrold Nadler (D-NY) and Chairwoman of the Committee on Oversight and Reform Carolyn B. Maloney (D-NY) that prohibits the use of nonconsensual, nondebtor releases that have helped the members of the Sackler family, the people and institutions that enabled Larry Nassar, and others like them escape accountability for wrongdoing through bankruptcy proceedings.


Chairman Nadler and Chairwoman Maloney issued the following joint statement on the markup: 


“The bankruptcy process is supposed to provide a fresh start, not a license for the powerful—from the Sackler family to Johnson & Johnson—to deprive the people they’ve harmed of the rights and remedies they deserve. Yet, for far too long, nondebtor releases have become weapons used by corporate insiders to evade responsibility for their actions. This behavior is unconscionable and Congress must put an end to it. Next week, the House Judiciary Committee will markup our legislation, the Nondebtor Release Prohibition Act, which will ban this abusive practice—as well as a new tactic known as a 'divisional merger'— and restore fairness to our nation’s bankruptcy system.  We thank all the Members on both the Judiciary and the Oversight and Reform Committees who have worked tirelessly on this issue, and we look forward to working with all our colleagues to get this long-overdue bill through Congress and onto President Biden’s desk.”


Chairwoman Maloney’s investigation has highlighted how the Sackler family has used the bankruptcy of Purdue Pharma to obtain nondebtor releases, or nonconsensual third-party releases, to shield themselves and their assets from lawsuits brought by the victims of the opioid crisis. And this loophole in bankruptcy law has increasingly been used by other actors who have not filed for bankruptcy themselves to escape personal accountability for their actions by shielding themselves through a bankruptcy proceeding of another corporation or entity.  The Nondebtor Release Prohibition Act of 2021 would eliminate the use of nonconsensual, nondebtor releases in private claims and those brought by the government, ensure that victims get to decide how they want their cases handled, and expand access to justice for those harmed by bad actors.


The Nondebtor Release Prohibition Act would also prohibit another abuse of the bankruptcy system, corporations’ use of so-called “divisional mergers” to move their liabilities into underfunded shell companies that then declare bankruptcy.  Earlier this month, Johnson & Johnson used this loophole in an attempt to shield itself from liability to the tens of thousands of people who contracted cancer after using the company’s talc-based products.  


Additional details for the markup can be found below: 


WHEN:         October 27, 2021 at 10:00 A.M. EDT

WHERE:      2141 Rayburn House Office Building

                       Washington, D.C.


WATCH:      The markup will stream live here.





NOTE: The Committee on the Judiciary is following COVID-19 guidelines developed in consultation with the Office of the Attending Physician (OAP) and the House Sergeant at Arms. Current guidance from the OAP states that wearing of a well-fitted, medical grade, filtration face mask is required when an individual is in an interior space and other individuals are present in all House Office Buildings, the Hall of the House, and House Committee Meetings. The general public will not be allowed to attend in person, however, the markup will be streamed live.


117th Congress