Do you remember when Paul Harvey used to come on the radio and tell us “the rest of the story?” He would weave a captivating tale presenting little-known or forgotten facts, and then at the end he would share that the subject he was talking about was something we all thought we were familiar with, or shock everyone by revealing that the pivotal character was some well-known person who downplayed this part of their past.
After dropping one of his bombshells, he would conclude by saying ‘And now you know… the rest of the story.” It’s a line that the Hanson & Payne team would like to drop every once in a while — especially when we are representing someone in an adversary matter.
What is an Adversary Matter?
An adversary matter or adversary proceeding is a lawsuit filed within a pending bankruptcy case. The goal is to persuade the court that certain debt or obligation should not be discharged. Some common examples of these claims include:
- Creditors who want the court to determine whether their claim will be discharged in the bankruptcy or still stand after the case is closed in order to provide some certainty
- Claims arising from the debtor’s fraud or intentional misrepresentations
- A divorced spouse owed maintenance, or who is worried that their ex-spouse will not pay the debts assigned to them in the Marital Separation Agreement
- Contractor theft claims, specifically in construction or development cases
- Claims arising from bad (bounced) checks
- Claims between former business associates or affiliates
- Claims against former employees for breach of a non-compete agreement or for theft/embezzlement
- Actions taken by the bankruptcy trustee in order to recover gifts or transfers of property to friends or family members of the debtor in the 1-year period prior to the bankruptcy filing.
How these proceedings play out has a dramatic impact on the overall bankruptcy. For a debtor, an adversary proceeding may be the difference between coming out of bankruptcy with a clean slate, or coming out still owing a significant amount of money to creditors. For creditors, the results of an adversary proceeding may play a big role in their own financial fate.
Revealing the Hidden Story
Persuading the court that a certain debt should survive bankruptcy involves pulling together evidence of the debt’s existence and the reasons that prove it should not be discharged. This can get tricky because the facts that dictate the outcome of an adversary matter vary greatly from case to case.
Knowing how these cases usually play out, and what hidden twists and turns might impact the outcome, help us reveal the rest of the story and shape the outcome of the underlying bankruptcy case.
Hanson & Payne is a Full-Service Bankruptcy Firm
If you have a specific question about adversary matters, or are simply investigating your options now that someone you have a business relationship with has filed for bankruptcy, the best thing to do is contact an experienced bankruptcy attorney, like those of us on the Hanson & Payne team. We offer representation in all adversary matters and represent an equal share of Milwaukee area debtors and creditors in such matters.