What happens in an adversary proceeding during bankruptcy?

An adversary proceeding is a lawsuit that is filed in the bankruptcy court while the debtor’s bankruptcy case is pending. The debtor, the bankruptcy trustee, the U.S. Trustee, a creditor or other interested party may file an adversary proceeding. The U.S. trustee and the bankruptcy trustee may file an adversary proceeding against the debtor or a creditor. On the other hand, a creditor will usually file an adversary proceeding against the debtor and the debtor will usually file an adversary proceeding against a creditor. In most instances, the issues being litigated in an adversary proceeding are directly related to or will have a direct impact on the underlying bankruptcy case.

An adversary proceeding begins with the filing of a complaint with the Clerk of the Bankruptcy Court and payment of the filing fee. The complaint must set forth matters related to jurisdiction and venue and must state the claims and relief being sought by the petitioner. After the complaint has been filed, the petitioner must serve it, along with the summons, on the respondent within 10 days of the date the summons was issued.  Once the respondent has been served, he has 30 days from the date the summons was issued to file an answer.  

Adversary proceedings are conducted pursuant to the Federal Rules of Civil Procedure, a complex set of rules and regulations that govern how litigation proceeds in the federal courts. Additionally, certain bankruptcy rules and local court rules may also come into play. Therefore, it’s best to be represented by an attorney if you are litigant in an adversary proceeding.