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 act ...
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
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debt ...
.
Procedure
Adversary proceedings are governed by certain court rules found in Part VII of the
Federal Rules of Bankruptcy Procedure 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 Enablin ...
. 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
In legal terminology, a complaint is any formal legal document that sets out the facts and legal reasons (see: cause of action) that the filing party or parties (the plaintiff(s)) believes are sufficient to support a claim against the party ...
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 Discove ...
and
trial
In law, a trial is a coming together of parties to a dispute, to present information (in the form of evidence) in a tribunal, a formal setting with the authority to adjudicate claims or disputes. One form of tribunal is a court. The tribun ...
(including
jury trial
A jury trial, or trial by jury, is a legal proceeding in which a jury makes a decision or findings of fact. It is distinguished from a bench trial in which a judge or panel of judges makes all decisions.
Jury trials are used in a signific ...
in appropriate cases). The adversary proceeding may address claims to do with
federal or
state law State law refers to the law of a federated state, as distinguished from the law of the federation
A federation (also known as a federal state) is a political entity characterized by a union of partially self-governing provinces, states, o ...
, 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
Discharge may refer to
Expel or let go
* Discharge, the act of firing a gun
* Discharge, or termination of employment, the end of an employee's duration with an employer
* Military discharge, the release of a member of the armed forces from ser ...
. Or, a debtor may commence an adversary proceeding against a creditor as a response to a violation of the
automatic stay. 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 An executory contract is a contract that has not yet been fully performed or fully executed. It is a contract in which both sides still have important performance remaining. However, an obligation to pay money, even if such obligation is material, d ...
, 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 subje ...
References
External links
Mobile-friendly edition of the Federal Rules of Bankruptcy Procedure(www.federalrulesofbankruptcyprocedure.org)
{{US-law-stub
United States bankruptcy law
Lawsuits