An Adversary Proceeding is a lawsuit within or related to a bankruptcy case, usually brought by a creditor of a bankruptcy debtor seeking certain relief from the bankruptcy automatic stay or discharge. The bankruptcy Trustee may also bring an adversary proceeding against a debtor.
The most common reason for a creditor to bring an adversary proceeding is where the debtor acted fraudulently against the creditor. In cases where the creditor can prove that the debt owed is based upon a fraud by the debtor, any bankruptcy discharge would not apply to the debt owed to this particular creditor. One example is where the debtor applied for a loan, but has lied on the loan application.
If you are a creditor of a debtor who has filed for bankruptcy, you may still have options to collect. You must act fast, however, as once a bankruptcy case is filed, the creditor has a very limited amount of time in which to act. Any delay could mean the difference between collecting the monies owed to you, or waiving your rights.
Contact Netzah & Shem-Tov to speak with our bankruptcy counsel. Do not wait until it is too late to act. 818-995-4200