Bankruptcy Adversary Proceedings
An adversary proceeding is a lawsuit brought in connection with a bankruptcy case. It is essentially an entire civil lawsuit tried under the bankruptcy court. Like a civil lawsuit, it begins with the filing of a formal complaint and formal service of process (service of the documents) on the parties being sued.
What Can Adversary Proceedings Accomplish?
An adversary proceeding can be used to accomplish several goals. Below is a list of reliefs available in an adversary proceeding and a brief explanation of each.
Recovery of Money or Property
Adversary proceedings can be initiated to recover any money or property belonging to the estate.
Determining Validity, Priority, or Extent of a Lien
An adversary proceeding can be used to determine the validity, priority, or extent of a lien or other interest in the debtor’s property.
Selling a Co-owner’s Interest in Property
Adversary proceedings are required to obtain an approval for the sale of both the interest of the estate and the interest of a co-owner in the debtor’s property.
Objecting to or Revoking a Discharge
An adversary proceeding is generally required to object to a debtor receiving a discharge, or to seek to revoke a discharge that has been already granted.
Revoking a Confirmation Order
In cases where a confirmation has been ordered in a Chapter 13 plan, an adversary proceeding must be commenced to revoke such an order.
Determining the Dischargeability of a Particular Debt
An adversary proceeding is required to determine the dischargeability of a particular debt. For example, if a debtor has a default judgment against him on the basis of an allegation of fraud, the judgment creditor may file an adversary proceeding to request that the bankruptcy court not discharge the default judgment debt.
Seeking Injunctive Relief
An injunctive relief is a court order to do or refrain from doing something. An adversary proceeding is required to obtain an injunction or other equitable relief in connection with a bankruptcy filing.
Subordinating Claims or Interests
An adversary proceeding is necessary to subordinate any allowed claim or interest on property, except when subordination is provided for in a Chapter 13 plan.
Obtaining Declaratory Relief
A declaratory relief is a judge’s determination of a party’s rights under a contract or statute. Requesting declaratory relief relating to any of the above actions must be done through an adversary proceeding.
Litigating a Removed Action
When a lawsuit in a state or federal court is being transferred to the bankruptcy court, it must be litigated as an adversary proceeding.