An adversary proceeding is essentially a civil complaint filed in the bankruptcy court. There are three parties in a bankruptcy court case who can file an adversary proceeding: a creditor, the Trustee, or the debtor. When an adversarial proceeding is filed, a Bankruptcy Judge is asked to asked make a decision about the issues presented. When a creditor files an adversary proceeding, it is usually because the creditor is arguing that the debt owed to the creditor should not be discharged in the bankruptcy because the debt arguably falls within one of the exceptions to discharge. An adversary proceeding filed by the Trustee usually involves allegations that the schedules were not filled out accurately and were intentionally fraudulent. Finally, a debtor may file an adversary proceeding against a creditor. These type of adversary proceedings are often initiated to recover damages for a creditor’s actions taken in violation of the U.S. Bankruptcy Code, in violation of the automatic stay or the discharge injunction (once the debtor has received a discharge, the former creditors are no longer allowed to try to collect the discharged debts).
The U.S. Bankruptcy Court for the Eastern District of Michigan provides instructions for filing adversary proceedings. To commence an adversary proceeding, the plaintiff must electronically file a complaint. A summons will be automatically issued, which is valid for 10 days for service. A re-issued summons must be obtained from the Clerk’s Office if the original summons expires. The answer to the complaint is due 30 days from the issuance of the summons. After the answer to the complaint is filed, an initial scheduling conference will be set by the Court. If an answer is not timely filed, a clerk's entry of default will be entered by the Court. All motions and briefs in adversary proceedings shall be electronically filed pursuant to L.B.R. 9014-1. If the adversary complaint is answered, the Court will set dates for a Final Pre-Trial Conference and Trial.
-Drew Broaddus