While most bankruptcy cases proceed smoothly from start to finish, some cases require bankruptcy court proceedings to determine issues relating to the bankruptcy case. Adversary proceedings and contested matters are the two types of bankruptcy litigation that may occur during a bankruptcy. There are substantial differences between them.
An adversary proceeding relates to the bankruptcy case, but it is a separate legal action (or lawsuit) that occurs outside the bankruptcy case. An adversary proceeding begins with the filing of a complaint to initiate the proceeding. In contrast, a contested matter occurs within the bankruptcy case. A contested matter starts with a motion filed in the bankruptcy case itself.
Separate rules in the Federal Rules of Bankruptcy Procedure apply to adversary proceedings and contested matters. Generally, the Rules and the complexity of the issues in the dispute determine whether a matter qualifies as an adversary proceeding or contested matter.
Certain disputes must be resolved in an adversary proceeding, rather than as a contested matter. Chapter VII of the Federal Rules of Bankruptcy Procedure governs adversary proceedings. Rule 7001 states that adversary proceedings include proceedings to:
The remaining Rules in Chapter VII address the specific procedures that apply to adversary proceedings. Generally, the rules either incorporate or are adaptions of the Federal Rules of Civil Procedure. For that reason, the process that applies to an adversary proceeding in a bankruptcy case is very similar to other civil litigation in federal court. Individual bankruptcy courts also have local rules that apply to adversary proceedings.
A contested matter typically involves issues that are less complex and can be decided by the bankruptcy court without extensive evidence. Contested matters usually are resolved more quickly than adversary proceedings.
Rule 9014 of the Federal Rules of Bankruptcy Procedure governs contested matters. The Advisory Committee Notes to Rule 9014 state that “Whenever there is an actual dispute, other than an adversary proceeding, before the bankruptcy court, the litigation to resolve that dispute is a contested matter.”
The Rule incorporates some, but not all, of the requirements that apply to adversary proceedings under Chapter VII. As a result, there are some procedural differences between adversary proceedings and contested matters.
Generally, a dispute in a bankruptcy case that is not included on the Rule 7001 list of adversary proceedings is a contested matter that can be resolved within the bankruptcy case itself, rather than in a separate court action. Examples of common types of contested matters include:
Individual bankruptcy courts sometimes require specific types of disputes to be filed as an adversary proceeding rather than a contested matter.
The trustee, a creditor, or the debtor may initiate adversary proceedings and contested matters. Analyzing a dispute in a bankruptcy case to determine which process is appropriate for resolving the issues requires evaluation from an attorney experienced in bankruptcy litigation.
The procedural rules for adversary proceedings and contested matters are extremely complex. While a bankruptcy attorney who assists with filing bankruptcy petitions may handle some limited types of contested matters, many disputes in a bankruptcy case require a lawyer whose practice focuses specifically on the litigation aspects of bankruptcy cases.
Additional details about adversary proceedings in bankruptcy cases are available in other blog articles, including the following:
At the Dave Burns Law Office, I represent creditors and debtors in adversary proceedings and contested matters in the United States Bankruptcy Courts in Minneapolis and St. Paul. Bankruptcy litigation is a central focus of my practice.
If you face or are considering filing any type of adversary proceeding in a bankruptcy case, I welcome you to contact me at (612) 677-8351 or by sending an email to me at email@example.com. I am available to meet with clients in both Minneapolis and St. Paul and welcome inquiries from clients and referring attorneys throughout the State of Minnesota.
The Dave Burns Law Office hopes you find this article helpful. But please do not rely on it as legal advice. The law changes regularly and the outcome of any legal matter depends on its unique circumstances. View full disclaimer