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Unless the court orders otherwise, upon dismissal of a case the court shall dismiss without prejudice all adversary proceedings associated with the case, and remand all removed cases to the courts from which they were removed.
The purpose of an adversary proceeding is to discuss specific issues that arise during the bankruptcy process, such as determining the dischargeability of a debt, recovering property abandoned by the trustee, or objecting to the discharge of a debtor.
When an Adversary Proceeding Might Happen. Many adversary proceedings arise from alleged fraud by a debtor. If it appears that a debtor has committed fraud or violated a court order, the trustee or creditors might file an objection to the debtor's discharge.
An adversary proceeding is the bankruptcy court's version of a civil action (a lawsuit). An adversary proceeding is opened by filing a complaint asking the court to rule on an issue related to a bankruptcy case.
In bankruptcy court disputed matters are either classified as ?contested matters? or ?adversary proceedings?. A contested matter commonly arises in disputed motions. Whereas adversary proceedings largely track traditional civil litigation (i.e., Complaint, Answer, Trial).
For example, they might want to object to a discharge, get an injunction, obtain a ruling on whether a debt can be discharged, or pursue money from a party not in the bankruptcy proceeding. A party involved in a bankruptcy case can start an adversary proceeding by filing a complaint.
Any claim or cause of action removed to a bankruptcy court pursuant to 28 U.S.C. §1478 is also an adversary proceeding. Unlike former Bankruptcy Rule 701, requests for relief from an automatic stay do not commence an adversary proceeding.
An adversary proceeding in bankruptcy is a separate lawsuit filed within the bankruptcy case. Like most lawsuits, it starts when someone (the creditor, the bankruptcy trustee, or you) files a complaint. Many bankruptcies go through to completion and discharge without any adversary proceedings.