While bankruptcy grants many people relief from overwhelming debts, not all bankruptcy proceedings are resolved in a straightforward manner. Instead, in some cases, one or more parties will file an adversary proceeding objecting to the discharge of the debtor’s debts. While there are pleading and procedural rules that parties filing adversary proceedings must comply with, they are granting substantial leeway with regard to amendments. The right to amend an adversary complaint was the topic of a recent ruling issued in a California bankruptcy case. If you are interested in pursuing debt relief through bankruptcy, it is wise to contact a trusted California bankruptcy lawyer to assess your options.
The History of the Case
It is reported that the debtors filed a Chapter 7 bankruptcy petition. Subsequently, one of their creditors filed an adversarial complaint. The allegations in the adversarial complaint were not offered in the court’s opinion; however, the creditor later sought leave to amend the complaint. The bankruptcy court issued an order granting leave to amend, and the debtors appealed. On appeal, the bankruptcy appellate panel (BAP) affirmed the bankruptcy court ruling. The debtors then appealed to the United States Court of Appeals, Ninth Circuit.
Amendments of Bankruptcy Adversary Proceedings
The Court of Appeals explained that it reviews decisions de novo, using the same standard of review that the BAP applied to the ruling issued by the bankruptcy court. Similarly, the bankruptcy court’s conclusions of law are reviewed de novo, and its factual findings are examined for clear error. Continue reading