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Sometimes an adversary proceeding will arise when a debtor owns property with someone else. The trustee may need to bring a lawsuit to divide your interest in the property from the interest of the co-owner so that they can force a sale and take the proceeds to pay your creditors.
An adversary proceeding may refer to any case in which two opposing parties resolve a dispute through a neutral third party, however, the term is more frequently used to refer to a specific type of action in bankruptcy court.
Editor's Note: Litigation in a bankruptcy occurs in two contexts: a contested matter (initiated by motion, application, or other filing in the main case) or an adversary proceeding (initiated by a complaint, with its own case number and docket).
After an adversary complaint is filed, the defendant has a specific deadline to file and serve a written response to the complaint, and then a series of pre-trial hearings/conferences take place until the lawsuit is settled, dismissed, or goes to trial.
Those matters, other than objections to claims, that are disputed but are not within the definition of adversary proceeding contained in Rule 7001.