Adversary proceedings under §§ 523, 727, 547, and 548: the contested work that unfolds inside and around a bankruptcy case. The firm represents trustees, creditors, and, where circumstances warrant, individual debtors.
Most bankruptcy cases are administrative. The difficult ones are litigation: adversary proceedings filed within the bankruptcy case itself, where questions of fraud, concealment, preference, and discharge are tried out under the Bankruptcy Code. This is where the firm’s federal-court experience concentrates. Patrick A. Foley is admitted in the United States District Courts and Bankruptcy Courts for the Eastern and Western Districts of Michigan and practices across both.
Section 727 actions seek to deny an individual debtor’s discharge altogether, most often on grounds of concealment of assets, false oaths, failure to keep adequate records, or destruction of financial records. The firm represents trustees and creditors in prosecuting 727 complaints, conducting Rule 2004 examinations, and tracing assets that debtors have attempted to conceal or transfer.
A 523 adversary proceeding excepts a particular debt from discharge (for example, debts arising from fraud, defalcation while acting in a fiduciary capacity, embezzlement, or willful and malicious injury). These actions require careful factual development and a clear theory of the underlying wrong. The firm represents creditors pursuing 523 claims, and represents debtors defending them where the claim lacks substance.
The firm regularly handles preference actions under section 547 and fraudulent transfer claims under section 548 and the Michigan Uniform Voidable Transactions Act. The representation runs both directions: the firm has prosecuted preference and transfer claims for trustees seeking to recover assets for the estate, and has defended recipients of pre-petition transfers against clawback demands.
Section 707 motions to dismiss for abuse, whether under the means test or under the totality of the circumstances, often raise difficult factual questions about income, reasonable expenses, and the debtor’s good faith. The firm handles 707 litigation from both sides.
The firm also represents individual debtors in Chapter 7 and Chapter 13 matters when the circumstances warrant. Volume consumer bankruptcy is not the firm’s primary practice; clients are most often referred by other attorneys or come to the firm because the matter involves complicating factors: contested discharge, business interests, litigation exposure, or significant assets requiring careful treatment.
The Bankruptcy Code is a statutory scheme, elegant in concept, unforgiving in practice. The distance between a filed petition and a confirmed plan is almost always measured in the adversary proceedings along the way.
Under 11 U.S.C. § 547, a trustee can recover certain payments a debtor made to creditors in the 90 days before filing (one year for insiders), on the theory that those creditors were paid ahead of everyone else. The claim does not require any wrongdoing by the creditor who was paid. Statutory defenses, including ordinary course of business and subsequent new value, often reduce or defeat these claims, so a demand letter should be reviewed before anything is paid.
A trustee can undo transfers the debtor made with intent to hinder, delay, or defraud creditors, and transfers made for less than reasonably equivalent value while the debtor was insolvent. Section 548 of the Bankruptcy Code reaches back two years before the filing, and the trustee can also use state law, including Michigan’s Uniform Voidable Transactions Act, which can reach further back. Recipients of the transfer, not just the debtor, can be sued.
Yes, in some situations. Under 11 U.S.C. § 523, debts arising from fraud, embezzlement, larceny, defalcation by a fiduciary, or willful and malicious injury can be excepted from discharge. For several of these categories, the creditor must file an adversary complaint within a short deadline, generally 60 days after the first date set for the meeting of creditors, or the claim is lost.
An objection under 11 U.S.C. § 727 seeks to deny the debtor a discharge entirely, for conduct such as concealing assets, destroying records, or making false statements under oath in the case. An objection under § 523 targets only a particular debt owed to a particular creditor. Denial of discharge is the more serious remedy and benefits every creditor.
In most adversary proceedings, the answer is due 30 days after the summons is issued by the court, not 30 days after you receive it. Missing the deadline can lead to a default judgment. The response deadline should be calendared immediately and counsel contacted early.
These answers are general information about Michigan and federal law, not legal advice about your situation. Contacting the firm does not create an attorney-client relationship.
The firm handles new matters on a consultative basis. Call the office, or send us a message through our contact form.