SACKLER Act Stop shielding Assets from Corporate Known Liability by Eliminating non-debtor Releases Act
Impact
If enacted, SB2831 would amend existing bankruptcy law, particularly Section 105 of Title 11 of the United States Code. This amendment would effectively enshrine the prohibition against courts allowing the use of non-debtor releases, ensuring that claims against corporations cannot be dismissed or released without appropriate considerations or consent from the relevant parties. This could have significant implications for how insolvency proceedings are managed, especially in cases where large corporations might previously have shielded themselves from litigation by releasing claims against non-debtors.
Summary
SB2831, also known as the SACKLER Act, is designed to prohibit non-consensual releases of claims by various entities, including states, municipalities, federally recognized tribes, and the United States against non-debtors. The intent of the bill is to ensure that corporations cannot evade liabilities through legal maneuvers, particularly in cases of bankruptcy. By tightening the rules around these releases, the legislation aims to hold non-debtors accountable for liabilities they may hold indirectly through claims against them, thereby providing a mechanism for aggrieved parties to seek redress.
Contention
The legislation is expected to generate substantial debate among lawmakers and stakeholders, as proponents argue that it addresses the loopholes that corporations exploit to avoid liability, especially in high-profile cases involving bankruptcy or liquidation. However, critics may express concerns about the potential for increased litigation costs and the implications for companies undergoing restructuring. The discussion around SB2831 thus centers on balancing corporate accountability with business operational realities in the context of insolvency.