What is a Bankruptcy Adversary Proceeding?

Sacramento Bankruptcy Lawyer Rick MorinAn Adversary Proceeding in a bankruptcy case is a big deal. You can think of an Adversary Proceeding as a lawsuit that occurs within an existing bankruptcy case. Read on to learn more about this important bankruptcy tool.

In most consumer bankruptcy cases, there isn’t a lot to fight about. The bankruptcy filer discloses all relevant information about their financial affairs, the court reviews their materials, and the case is moved along the process without a lot of friction. Not all bankruptcy cases are so easy.

Some Bankruptcy Cases Involve Litigation

A small percentage of bankruptcies involve legal disputes that must be adjudicated by the court. To do so, a party must file an Adversary Proceeding. These legal cases are filed in the bankruptcy court.

For the most part, litigation surrounding a debtor’s financial affairs is halted when a bankruptcy is filed. This means that most disputes must be shifted to the purview of the bankruptcy court. The idea is simple. Because the bankruptcy court is already handling the debtor’s financial affairs, the court is the best place for any disputes to be heard during the bankruptcy.

Adversary Proceedings are Just Like Lawsuits in Federal Courts

Adversary Proceedings in bankruptcy are very similar to litigation in the federal district courts. The Federal Rules of Evidence apply, as do the Federal Rules of Civil Procedure. Some of these rules are modified by the Bankruptcy Rules. For the most part, a federal litigator would feel right at home in a bankruptcy Adversary Proceeding.

Parties to Adversary Proceedings can file motions, engage in discovery, and have a full trial to the merits of a legal matter. At least here in the Eastern District of California, the bankruptcy judges keep the Adversary Proceedings moving along. Don’t expect a typical Adversary Proceeding to languish on the court docket.

What to do if Served With an Adversary Proceeding

Have you been served with notice of an Adversary Proceeding? Do not ignore the summons. The bankruptcy court will move quickly if you do not participate. Keep this in mind: not all bankruptcy counsel accept representation in Adversary Proceedings. Make sure that you contact a qualified bankruptcy attorney quickly. Not responding to an Adversary Proceeding means that you will give up your rights.

My law firm helps both debtors and creditors litigate complex issues in the bankruptcy court. Please contact my office at (916) 333-2222 to discuss Adversary Proceedings in bankruptcy.