An adversary proceeding in bankruptcy is a type of
lawsuit
-
A lawsuit is a proceeding by a party or parties against another in the civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used in reference to a civil actio ...
in the
American
American(s) may refer to:
* American, something of, from, or related to the United States of America, commonly known as the "United States" or "America"
** Americans, citizens and nationals of the United States of America
** American ancestry, pe ...
legal system. It is distinguished from other suits by being filed a
United States bankruptcy court
United States bankruptcy courts are courts created under Article I of the United States Constitution. The current system of bankruptcy courts was created by the United States Congress in 1978, effective April 1, 1984. United States bankruptcy c ...
in connection with a larger
bankruptcy proceeding.
Procedure
Adversary proceedings are governed by certain court rules found in Part VII of the
Federal Rules of Bankruptcy Procedure
The Federal Rules of Bankruptcy Procedure (abbreviated Fed. R. Bankr. P. or FRBP) are a set of rules promulgated by the Supreme Court of the United States under the Rules Enabling Act, directing procedures in the United States bankruptcy courts. ...
and, in part, by the
Federal Rules of Civil Procedure
The Federal Rules of Civil Procedure (officially abbreviated Fed. R. Civ. P.; colloquially FRCP) govern civil procedure in United States district courts. The FRCP are promulgated by the United States Supreme Court pursuant to the Rules Enabling ...
. A bankruptcy case may contain one or more adversary proceedings or (most commonly) none at all.
Other than their connection to a bankruptcy proceeding, adversary proceedings are largely similar to a standard lawsuit in federal district court. The suit is opened by a
complaint filed with the Bankruptcy Court, and proceeds through the same stages of litigation, including
discovery
Discovery may refer to:
* Discovery (observation), observing or finding something unknown
* Discovery (fiction), a character's learning something unknown
* Discovery (law), a process in courts of law relating to evidence
Discovery, The Discover ...
and
trial
In law, a trial is a coming together of Party (law), parties to a :wikt:dispute, dispute, to present information (in the form of evidence (law), evidence) in a tribunal, a formal setting with the authority to Adjudication, adjudicate claims or d ...
(including
jury trial
A jury trial, or trial by jury, is a Trial, legal proceeding in which a jury makes a decision or Question of law, findings of fact. It is distinguished from a bench trial in which a judge or Judicial panel, panel of judges makes all decisions.
...
in appropriate cases). The adversary proceeding may address claims to do with
federal
Federal or foederal (archaic) may refer to:
Politics
General
*Federal monarchy, a federation of monarchies
*Federation, or ''Federal state'' (federal system), a type of government characterized by both a central (federal) government and states or ...
or
state law State law refers to the law of a federated state, as distinguished from the law of the federation of which it is a part. It is used when the constituent components of a federation are themselves called states. Federations made up of provinces, cant ...
, or in rare cases other law, as well. The only limitation is that the suit must have some bearing on the liabilities or assets of the bankrupt debtor or the debtor's discharge.
Adversary proceedings may be filed by the bankruptcy trustee or by other parties. For example, a creditor may file an adversary proceeding to object to the debtor's
discharge. Or, a debtor may commence an adversary proceeding against a creditor as a response to a violation of the
automatic stay
In United States bankruptcy law, an automatic stay is an automatic injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. Under section 362 of the United States Bankruptcy ...
. Very commonly, the debtor-in-possession in a
Chapter 11
Chapter 11 of the United States Bankruptcy Code (Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, wheth ...
reorganization of a business debtor will initiate adversary proceedings against a party with whom the debtor had an
executory contract, against whom it had a claim in
tort
A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
, or to whom it made a
preferential transfer prior to filing for bankruptcy, intending to collect funds to maximize working assets.
An adversary proceeding is more formal than a
contested matter. A contested matter in bankruptcy is governed by Rul
9014of the Federal Rules of Bankruptcy Procedure.
A debtor can attempt to discharge student loans through bankruptcy by use of the adversary proceeding.
["Bankrupt your student loans and other discharge strategies," by Chuck Stewart, Ph.D., . June 2006.]
See also
*
Bankruptcy in the United States
In the United States, bankruptcy is largely governed by federal law, commonly referred to as the "Bankruptcy Code" ("Code"). The United States Constitution (Article 1, Section 8, Clause 4) authorizes Congress to enact "uniform Laws on the sub ...
References
External links
Mobile-friendly edition of the Federal Rules of Bankruptcy Procedure(www.federalrulesofbankruptcyprocedure.org)
{{US-law-stub
United States bankruptcy law
Lawsuits