Adversary Proceeding

Category: legal

A separate lawsuit filed within a larger bankruptcy case, functioning like a standalone civil trial.

An adversary proceeding is the "fight." If the trustee wants to sue someone for a fraudulent conveyance, or a creditor wants to prove a debt was fraudulent (and thus non-dischargeable), they must file an adversary proceeding. It features discovery, depositions, and a full trial before the bankruptcy judge.

Common Examples

• The creditor launched an adversary proceeding to block the discharge of a loan they claim was secured using forged financial statements.
• The complexity of the adversary proceeding significantly delayed the final closing of the corporate bankruptcy estate.