Today, Congresswomen Deborah Ross (D-NC) and Claudia Tenney (R-NY) introduced the bipartisan Closing Bankruptcy Loopholes for Child Predators Act, which will address misuse of the bankruptcy system by organizations facing lawsuits for child sex abuse. As more and more states eliminate or extend civil statutes of limitations for child sex abuse, many organizations are facing a high volume of lawsuits from individuals who were abused as children through participation in these organizations—including the Boy Scouts of America, Catholic archdioceses, and USA Gymnastics. These organizations often end up filing for bankruptcy, which allows them to stop discovery and silence survivors. 

“For far too long, organizations that previously turned a blind eye to horrendous and unspeakable abuse have escaped full liability for their actions by filing for bankruptcy,” said Congresswoman Ross. “Survivors of child sex abuse deserve to seek justice for the trauma they endured, but loopholes in our bankruptcy system have allowed large organizations to avoid the consequences of their negligence and abuse. There is no solution that can reverse the trauma that these individuals have experienced, but this legislation will get us one step closer to a justice system where survivors have a fair chance of fighting for the remedies they are owed.”

"Unacceptable loopholes in our legal system currently allow organizations guilty of child sexual abuse to exploit bankruptcy laws, denying victims justice and stalling the legal progress," said Congresswoman Tenney. "By obstructing discovery and silencing victims, these entities prolong court proceedings and deprive victims of the justice they rightfully deserve. While the Closing Bankruptcy Loopholes for Child Predators Act cannot erase the pain inflicted, it seeks to address these injustices and offer victims a semblance of the justice they rightly demand."

This legislation is endorsed by CHILD USA. Congresswoman Ross announced introduction of the bill at a virtual press conference today. A recording is available here.  

The Closing Bankruptcy Loopholes for Child Predators Act would:

• Allow child sex abuse victims to continue conducting discovery during bankruptcy proceedings. Currently, the initiation of bankruptcy proceedings halts other active civil litigation in cases involving child sex abuse.
• Allow child sex abuse victims to submit victim impact statements in Chapter 11 proceedings. This will allow child sex abuse victims to be heard during bankruptcy proceedings and before any consideration of a reorganization plan, ensuring that their experiences are taken into account.
• Require forensic accountants to assess the debtor’s estate and nondebtor holdings in child sex abuse cases. This will ensure that debtor organizations are fairly submitting their assets for consideration in a reorganization plan and enable victims of child sex abuse to receive fair remedies.

Organizations that have filed for bankruptcy due to sexual abuse claims include: USA Gymnastics; Boy Scouts of America; Baltimore Archdiocese; Diocese of Tucson, AZ; Diocese of Spokane, WA; Diocese of Davenport, IA; Diocese of San Diego, CA; Archdiocese of New Orleans, LA; Diocese of St. Cloud, MN; Diocese of Camden, NJ; Diocese of Norwich, CT; and more.

Bill text is available here.