8/5/2021 Chairman Nadler Statement for Subcommittee Hearing on "Oversight of the Bankruptcy Code, Part 1: Confronting Abuses of the

of the Chapter 11 System" | U…

Press Releases
Chairman Nadler Statement for Subcommittee Hearing on
"Oversight of the Bankruptcy Code, Part 1: Confronting
Abuses of the Chapter 11 System"
Washington,
July 28, 2021

Washington, D.C. - Today, House Judiciary Committee Chairman Jerrold

Nadler (D-NY) delivered the following opening statement, as prepared, dur-
ing a Subcommittee on Antitrust, Commercial, and Administrative Law hear-
ing on "Oversight of the Bankruptcy Code, Part 1: Confronting Abuses of the
Chapter 11 System:"

"Today’s hearing is the first in a series of hearings examining potential re-

forms to ensure that commercial and consumer bankruptcy processes func-
tion effectively to support the economy, provide a meaningful option of last
resort for individuals and businesses, and are not abused to deprive people of
their rights or livelihoods. 

"In 2005, as the Ranking Member of this Subcommittee, I fought against the
Bankruptcy Abuse Prevention and Consumer Protection Act—a disastrous
amendment to the Bankruptcy Code that stacked the deck against everyday
consumers in favor of creditors and giant companies.

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8/5/2021 Chairman Nadler Statement for Subcommittee Hearing on "Oversight of the Bankruptcy Code, Part 1: Confronting Abuses of the Chapter 11 System" | U…

"Many of the fundamental problems of our bankruptcy system stem from

that law, which makes it more difficult for Americans who have fallen on hard
times to escape crushing debt.

"With that in mind, it is essential that we examine a wide range of topics as

part of this series.  This includes how student loans are treated in bankruptcy,
the racial disparities that exist in the use of the consumer bankruptcy system,
the rights of workers and retirees in bankruptcy, and the role of the U.S.
Trustee Program.  These hearings will explore solutions to help people get a
fresh start and a fair deal through the bankruptcy system. 

"Those principles are also at the heart of today’s hearing, which will examine
corporate misuse of the bankruptcy system, especially a procedure by which
wrongdoers can be immunized from liability—without agreement from the
wronged party—in another entity’s bankruptcy proceeding.

"The bankruptcy system is supposed to work for everyone, but in many cases,
it works only for the powerful.   And too often, it works best for big corpora-
tions and the very wealthy, who have not even filed for bankruptcy but who
have figured out how to make the system work to their benefit.

"That is exactly what we are dealing with today: 'Bankruptcy grifters,' to bor-
row a term coined by Professor Lindsey Simon, that leech off another entity’s
bankruptcy to hide their misdeeds, silence victims, and secure their ill-gotten
payouts. 

"As Chairman Cicilline said, today’s hearing also builds off the important work
of my good friend, Chairwoman Maloney. She has conducted a thorough,
tireless investigation of the role of the Sackler family and Purdue Pharma in
the opioid crisis. Under her leadership, the Committee on Oversight and Re-
form has shown the devastating impact that the corporate bankruptcy
process can have on ordinary Americans. 

"In particular, she has helped shine a light on one of the most troubling as-
pects of the Purdue Pharma settlement—the use of a lifetime get-out-of-jail-

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8/5/2021 Chairman Nadler Statement for Subcommittee Hearing on "Oversight of the Bankruptcy Code, Part 1: Confronting Abuses of the Chapter 11 System" | U…

free card known as a non-consensual non-debtor release.   Under this provi-

sion, the Sackler family, who have not had to file for bankruptcy, will escape
liability entirely for their role in precipitating the opioid crisis, despite the ob-
jections of many of their victims.

"The families of the people who died from addiction and misuse of OxyContin
should be able to hold accountable the people that flooded the country with
a dangerous drug they knew would be abused. 

"That is why today I was proud to introduce, along with Senator Warren, Sena-
tor Durbin, Chair Maloney, and Chairman Cicilline, the 'Nondebtor Release
Prohibition Act of 2021.'  Our bill will ban non-consensual non-debtor releases
in most circumstances, impose strict safeguards for consensual non-debtor
releases, and address the use of divisional mergers to shield a company’s as-
sets from bankruptcy.

"I want to thank Senator Elizabeth Warren for our work together to develop
this important legislation. She is a powerful advocate for ensuring that the
bankruptcy system works for people instead of against them, and I am proud
of our partnership on these crucial reforms to the bankruptcy code. 

"But most important of all, I want to thank the victims, survivors, affected
families, and advocates who have come forward to say that the bankruptcy
laws should not be allowed to force anyone—no matter who you are—into
giving up their last chance at some semblance of justice against someone
grifting off the bankruptcy process. 

"Victims of sexual assault should be able to hold their abusers, and the people
and institutions that enabled those abusers, accountable.  No one should be
coerced into giving up their right to a fair trial before a jury of their peers.  No
one should be powerless to stop a corporate insider from looting the compa-
ny they invested in. 

"And no one should be able to evade accountability by gaming the bank-

ruptcy system.  Coerced non-debtor releases fall far outside of the limited ju-

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8/5/2021 Chairman Nadler Statement for Subcommittee Hearing on "Oversight of the Bankruptcy Code, Part 1: Confronting Abuses of the Chapter 11 System" | U…

risdiction of the bankruptcy courts and are inconsistent with   the Fifth
Amendment’s right to due process of law. 

"Today’s hearing is an opportunity to conduct meaningful oversight over this

concerning trend, and other abuses of the bankruptcy process, and to exam-
ine potential solutions to reverse them.

"I thank Chairman Cicilline again for holding this important hearing, I look
forward to the testimony from our exceptional panel of witnesses, and I yield
back the balance of my time."

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