What is an adversary proceeding?

An adversary proceeding is a type of lawsuit within the bankruptcy court. It is a separate lawsuit from the main bankruptcy case that is filed to settle a specific dispute that exists at the time the bankruptcy case is filed. In North Carolina, adversary proceedings are governed by the Federal Rules of Bankruptcy Procedure. The most common types of adversary proceedings are those that seek to determine if a debt should be discharged in bankruptcy or if particular property should be excluded from the bankruptcy estate. The purpose of an adversary proceeding is to give each side of the dispute an opportunity to be heard before a decision is made. Adversary proceedings are also used to determine whether a claim should be subordinated, equitably modified, or whether a plan should be confirmed. If a dispute cannot be resolved without the help of the bankruptcy court, an adversary proceeding will be necessary. In North Carolina, any disputes between creditors and debtors, or between debtors and the bankruptcy trustee, must be brought before the bankruptcy court by filing an adversary proceeding. The filing party, known as the plaintiff, then prepares a complaint that includes the facts and legal arguments supporting their position. Both parties must present evidence and legal arguments to the bankruptcy judge, who makes the final decision regarding the dispute.

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What is an adversary proceeding?

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