More Information About Bankruptcy Adversary Hearings

U.S. District Court, Dirksen Building  |  Chicago,Illinois

Sometimes it is necessary for a party to protect and litigate his or her rights within the Bankruptcy Court. This is done through what is called an adversary proceeding. This takes place as bankruptcy proceedings are being completed or are pending.

Petti Murphy & Associates are experienced trial lawyers who represent clients in specialized litigation that takes place in the U.S. Bankruptcy Court. We will help you understand the process for protecting your rights as a bankruptcy matter is pending or proceeding. Our attorneys will explain all options and alternatives so that you are equipped to make the best possible decision.

Call our law firm at 630-457-1691 today for a consultation.

Adversary Proceedings To Protect Your Rights During Bankruptcy

If disputes arise between parties where one of the parties or his or her property is already under the legal supervision of a Bankruptcy Court because that party has filed a petition seeking bankruptcy relief, then the disputes will be presented to and resolved by the Bankruptcy Court (and not a federal district trial court or a state circuit trial court). An example may be helpful.

Let's say Gary Goodguy sells all of his landscaping trucks, trailers, backhoes, and all of his tools and inventory, to Freddy Flybinight under an installment contract. Goodguy does all of the necessary lien recordings to preserve his rights to repossess this property if Flybinight defaults. Lo and behold, Flybinight defaults on the purchase contract with Goodguy. Flybinight goes belly-up and files a Chapter 7 Bankruptcy petition. In the bankruptcy proceeding Flybinight claims that all of the property is his and belongs to the "estate." The Trustee sides with the debtor, and proposes to sell the property for a substantial sum, deposit the proceeds in the bankruptcy estate, and spreads the proceeds to all unsecured creditors (after deducting the Trustee's commission, his attorney's fees and expenses of administration). Here's where we file an Adversary Proceeding Complaint, assert our client's ownership rights, and ask the Bankruptcy Court to return 100 percent of the property to our client. If the Trustee disputes our Complaint, then the "Adversary Proceeding" is set down for an evidentiary hearing; and the "pleading," "motion," "discovery" and "trial" rules of regular federal civil court litigation become applicable. Adversary Proceedings are frequently initiated to:

  1. recover money or property;
  2. determine the validity, priority, or extent of a lien or other interest in property;
  3. sell property free of a lien or other interest for which the holder can be compelled to take a money satisfaction;
  4. object to or revoke a discharge;
  5. obtain an injunction;
  6. obtain relief from a stay;
  7. determine the dischargeability of a debt;
  8. revoke confirmation of a rehabilitation plan; or
  9. declare a debt dischargeable by a debtor. (9 Am. Jur 2d §113)

To be properly represented in an Adversary Proceeding, the contestants should be represented by experienced trial lawyers with the necessary specialized skills, that is, lawyers who have the aptitude and training for trial and pretrial work. Petti Murphy & Associates are familiar with the litigation rules, the formal discovery procedures and the federal motion practice, and are trained trial lawyers who can best represent the interests of an adversary litigant in trials before the Bankruptcy Court.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.