This entry is part of Nelson Mullins’s ongoing “Bankruptcy Basics” blog series that is intended to address foundational aspects of bankruptcy for new and non-bankruptcy practitioners and professionals. This entry will discuss the general structure of bankruptcy cases and the differences between “adversary proceedings” and “contested matters.”

Bankruptcy law and many of the concepts therein can seem foreign for many professionals who do not regularly practice in this area of the law. And bankruptcy terminology can seem like a new language, even with regard to seemingly simple terms. For example, there are technically three different types of “proceedings” in a bankruptcy case: (1) the bankruptcy case, (2) adversary proceedings, and (3) contested matters. 

The “bankruptcy case” is the overarching case that is initiated by the filing of a petition for relief under the Bankruptcy Code. These cases are usually filed under Chapter 7 and 13 for individuals and 11 for corporations, with other chapters dedicated to specific types of filers (municipalities, for example, file under Chapter 9). Within a bankruptcy case there are many filings, most of which are addressed in the main case itself.

However, if a filing by the debtor or a creditor raises a discrete controversy, that filing actually begins a “contested matter.” This is important because the adjudication of “contested matters” is governed by certain Federal Rules of Civil Procedure which are incorporated by Rule 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). Critical among these are the discovery rules. In bankruptcy cases in general, a party-in-interest can file a motion under Bankruptcy Rule 2004 for an examination of a person or documents that can be exceedingly broad. These “2004 exams” are often dubbed permissible “fishing expeditions” and can go into all sorts of issues. However, if a contested matter has been initiated, Rule 2004 is replaced by the discovery rules in section 7000 of the Bankruptcy Rules. As such, discovery is more limited in a contested matter than under a general Rule 2004 exam.

Additionally, there are entire lawsuits that can be filed within the scope of a bankruptcy case. These separate but related “adversary proceedings” involve the filing of a complaint and the full scope of the Federal Rules of Civil Procedure, as modified by the 7000’s section of the Bankruptcy Rules, are incorporated. Adversary Proceedings are initiated by filing a complaint in the main bankruptcy case, but this filing opens a new docket altogether and all filings thereafter are made in the adversary proceeding docket, not the main case.

Knowing these distinctions is critical, because depending on the type of matter you’re dealing with, different rules may apply. Additionally, rules of “finality” with respect to certain orders are directly impacted by whether the order is entered in the bankruptcy case, with respect to a contested matter, or in an adversary proceeding. Because bankruptcy has a 14 day window for appealing “final” orders, these distinctions can be critical and time-sensitive. 

If confronted with a bankruptcy matter either as an affected party or by a client, one of the first things you should do is determine what the nature of the matter is, so you can respond in the appropriate manner. Knowing the differences between “cases,” “contested matters,” and “adversary proceedings” can go a long way in helping to determine what the best course of action may be.