An adversary proceeding is initiated with the filing of a complaint in bankruptcy court within a specific debtor’s case. Most people who file a bankruptcy case, whether under Chapter 7 or Chapter 13, proceed through their bankruptcy case without an adversary case ever being filed since it is limited to certain circumstances as delineated by federal law and the Federal Rules of Bankruptcy Procedure (FRBP), specifically Rule 7001.
An adversary case is a proceeding to:
(1) Recover money or property. Except for a proceeding:
(a) to compel the debtor to deliver property to the trustee;
(b) to recover or reclaim property in the hands of a Debtor-In-Possession or trustee under 11 USC §554 (abandonment) or §725 (disposition of property);
(c) under FRBP 2017 (examination of debtor’s transactions with debtor’s attorney); and
(d) under FRBP 6002 (accounting by the prior custodian of the property of the estate)].
(2) Determine the validity, priority, or extent of a lien or other interest in property.
(3) Obtain approval pursuant to 11 USC §363 for the sale of both the interest of the estate and a co-owner (i.e., non-debtor) in property.
(4) Object to or revoke a discharge, except for motions objecting to discharge pursuant to certain provisions of Title 11.
(5) Revoke an order of confirmation of a Chapter 11, Chapter 12, or Chapter 13 plan.
(6) Determine the dischargeability of a debt.
(7) Obtain an injunction or other equitable relief.
(8) Subordinate any allowed claim or interest.[Except for when subordination is provided in a Chapter 9, 11, 12, or 13 plan].
(9) Obtain a declaratory judgment relating to any of the foregoing in points 1 through 8.
(10) Determine a claim or cause of action removed pursuant to 28 USC §1452 [removal of claims related to bankruptcy cases].
Examples of adversary proceedings are those brought to avoid transfers by the debtor under 11 USC § 544 [trustee’s power to avoid obligations incurred by the debtor], § 545 [trustee’s power to avoid the fixing of a statutory lien on the property of the debtor], § 547 [trustee’s power to avoid preferential transfers], § 548 [trustee’s power to avoid fraudulent transfers and obligations], and § 549 [trustee’s power to avoid post-petition transaction].
Other examples include those regarding the denial of discharge, proceedings to revoke discharge, proceedings regarding the dischargeability of a particular debt, proceedings to revoke an order of confirmation of a plan in chapters 11, 12, or 13.
Adversary proceedings may be complicated, crucial matters in a bankruptcy case. Consulting with experienced bankruptcy counsel in any situation where an adversary case has been filed may be necessary to ensure that a bankruptcy case proceeds smoothly and provides a fresh start.
The cost of filing a Chapter 7 bankruptcy case is often less than $2,000, which is an efficient, effective, and economical way to solve burdensome financial problems and gain a fresh start. Theron Morrison and the Morrison Law Group may help any Utah resident better understand their bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.