Adversary proceeding in bankruptcy (United States)
An Adversary proceeding in bankruptcy, is a lawsuit in the American legal system filed by a party called a "plaintiff" against a party called a "defendant" filed in a United States bankruptcy court in connection with a bankruptcy proceeding.
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. A bankruptcy "case" may contain one or more adversary proceedings (or none at all).
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. Very commonly, the debtor-in-possession in a Chapter 11 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, or to whom it made a preferential transfer prior to filing for bankruptcy, intending to collect funds to maximize working assets. See generally Rule 7001(4) of the Federal Rules of Bankruptcy Procedure.
A debtor can attempt to discharge student loans through bankruptcy by use of the adversary proceeding.
- Mobile-friendly edition of the Federal Rules of Bankruptcy Procedure (www.federalrulesofbankruptcyprocedure.org)
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