Congresswoman Scanlon Introduces Corporate Accountability Bill to Ban Executive Handouts During Bankruptcy

Washington, D.C. — Congresswoman Mary Gay Scanlon (PA-05) today introduced the No Bonuses in Bankruptcy Act of 2026, legislation to enact reforms for the bankruptcy process by prohibiting companies in bankruptcy from paying a bonus or other incentive-based compensation to employees making $250,000 or more. In Chapter 11 bankruptcy, Section 503(c) of the Bankruptcy Code restricts retention bonuses for executives and, to a lesser extent, executive and non-executive incentive bonuses during the bankruptcy process. Debtors must obtain court approval to pay employee bonuses during bankruptcy — a process that gives creditors an opportunity to raise objections. However, the Bankruptcy Code generally does not have oversight of retention bonuses paid before a bankruptcy filing, known as pre-bankruptcy bonuses. The No Bonuses in Bankruptcy Act would reform this part of the bankruptcy process by prohibiting companies from paying a bonus to employees making $250,000 or more, and give the U.S. Trustee the authority to claw back bonuses made six months before bankruptcy if the bonus would not have been allowed during bankruptcy. “Executives should not be giving themselves a pat on the back for laying off workers and closing facilities,” said Rep. Scanlon . “The bankruptcy structure has long provided a loophole to reward executives for their negligence while leaving working-class Americans without jobs and pay. I’m proud to introduce No Bonuses in Bankruptcy to end a bad incentive structure that pads the pockets of executives, instead of holding them accountable.” In September 2021 , the U.S. Government Accountability Office (GAO) released a report detailing the leniency of bankruptcy judges approving dozens of multi-million-dollar executive compensation packages to firms in bankruptcy. In recent years, companies like Spirit Airlines , Purdue Pharma , and Saks Global Enterprises LLC have sought bonuses for their executive teams through the bankruptcy process while laying off employees and closing operations. Locally, executive members of the Philadelphia Energy Solutions refinery were awarded $4.5 million in bonuses in September 2019 following mass layoffs of employees with no severance or extended medical benefits. "The American people are frustrated with a system that rewards corporate incompetence and malfeasance, especially when they leverage systems largely inaccessible to everyday working Americans. This bill rests on a basic principle: executives should not be rewarded financially when they bankrupt their companies. It just makes sense,” said Joshua Miller, Director of Congress Watch at Public Citizen. Find the full bill text here . ###