The bankruptcy system was never designed to manage sexual abuse claims. US bankruptcy law has long been understood as a response to economic distress rather than mass torts.

Built in the 1970s to address debt problems, Chapter 11 doesn’t reflect what we now know about trauma or how institutions mishandled sexual abuse cases for decades. Yet youth organizations, churches, schools, and nonprofits progressively use Chapter 11 bankruptcy to resolve thousands of revived or long buried claims.

Survivors can face unparalleled barriers. Trauma often delays disclosure for many years, but bankruptcy deadlines have peculiarly short bar dates ignore that reality. Repeating depositions and aggressive discovery can compound harm, yet few trauma-informed protections exist.

Meanwhile, institutions and insurers have better advantages: deep resources, control of information, and important influence over negotiations. Survivors, scattered across the country and often unrepresented at the outset, struggle to participate in equivalent footing.

Third-party releases also can shield affiliated organizations from survivors’ lawsuits. After the Supreme Court’s 2024 ruling in Harrington v. Purdue Pharma L.P., and their use in sexual abuse cases raises good fairness concerns. Bankruptcy practice is also incompatible. Each sexual abuse case has different deadlines, rules, and settlement structures, creating uneven protections depending on where a case is filed.

Without reform, bankruptcy can hide misconduct, limit access to insurance information, and pressure survivors into nimble settlements.