H.R. 10942 – No Bonuses in Bankruptcy Act of 2026

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Updated November 3, 2026 at 6:41 AM UTC

The No Bonuses in Bankruptcy Act of 2026 changes the bankruptcy code to stop the payment of bonuses to high‑paid employees and insiders of a debtor during a bankruptcy case. It applies to any case filed after the law takes effect and targets individuals earning more than $250,000 a year, as well as any insider or employee whose bonus would push their pay above that level. The bill also gives trustees the power to recover such bonus payments made shortly before filing.

Key Provisions

Adds a new rule to Section 503 that bars any bonus to (A) employees earning over $250,000 annually, (B) insiders of the debtor, or (C) any employee whose bonus would raise their annual pay above $250,000.
Defines “bonus” as extra compensation beyond regular wages that serves as a retention, incentive, or reward, but excludes sales commissions and payments required by collective‑bargaining agreements.
Expands Section 547 to let trustees avoid (undo) any bonus payment made within 180 days before the bankruptcy filing if that bonus would be prohibited under the new Section 503 rule.
Specifies that the changes take effect on the date the law is enacted and apply only to bankruptcy cases filed after that date.

Legislative Activity

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1 earlier action

HouseIntro Referral Latest Action

Referred to the House Committee on the Judiciary.

Judiciary Committee

October 29, 2026

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HouseIntro Referral

Introduced in House

October 29, 2026

HouseIntro Referral

Referred to the House Committee on the Judiciary.

Judiciary Committee

October 29, 2026

Bill Text

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Introduced in HouseIssued October 29, 2026

I

119th CONGRESS

2d Session

H. R. 10942

IN THE HOUSE OF REPRESENTATIVES

October 29, 2026

Ms. Scanlon introduced the following bill; which was referred to the Committee on the Judiciary

A BILL

To amend title 11, United States Code, to prohibit the payment of bonuses to highly compensated individuals employed by the debtor and insiders of the debtor to perform services during the bankruptcy case, and for other purposes.

1.

Short title

This Act may be cited as the No Bonuses in Bankruptcy Act of 2026.

2.

Amendments

(a)

Allowance of administrative expenses

Section 503 of title 11, United States Code, is amended by adding at the end the following:

(d)

(1)

Notwithstanding any other provision of this section, there shall neither be allowed nor paid a bonus to—

(A)

an individual employed by the debtor at an annual rate of compensation exceeding $250,000;

(B)

an insider of the debtor; or

(C)

an individual employed by the debtor to the extent that such bonus would cause that individual’s annual rate of compensation to exceed $250,000.

(2)

For purposes of this subsection, the term bonus means a transfer to, or obligation incurred for the benefit of, an individual employed by the debtor or insider of the debtor as compensation for services in an amount that—

(A)

is in addition to the existing wages, salary, or base compensation of an insider of the debtor or individual employed by the debtor; and

(B)

can be construed as a form of retention, incentive, or reward related to the services provided to the debtor by the insider or the individual employed by the debtor.

The term bonus does not include a sales commission. Nor does the term bonus include any transfer or obligation pursuant to the terms of a collective bargaining agreement.

(3)

The term an individual employed by the debtor includes, but is not limited to, an employee, consultant, or contractor.

.

(b)

Preferences

Section 547 of title 11, United States Code, is amended by adding at end the following:

(j)

Notwithstanding any other provision of this section, the trustee may avoid any transfer of an interest of the debtor in property made within 180 days before the date of the filing of the petition if such transfer is the payment of a bonus of the kind that would be disallowed under subsection (c) or (d) of section 503.

.

3.

Effective date; application of amendment

(a)

Effective date

Except as provided in subsection (b), this Act and the amendments made by this Act shall take effect on the date of the enactment of this Act.

(b)

Application of amendment

The amendments made by this Act shall apply only with respect to cases commenced under title 11, United States Code, on or after the date of the enactment of this Act.