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Simple English definitions for legal terms
related proceeding
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A quick definition of related proceeding:
Related proceeding: A legal case that involves a claim that will affect a person or company's bankruptcy case, but is not specifically related to bankruptcy law. For example, if someone sues a bankrupt person for something unrelated to their bankruptcy, it would be considered a related proceeding. This type of case can be heard in a state court, but may also be heard in a federal district court if necessary.
A more thorough explanation:
RELATED PROCEEDING
A related proceeding is a legal case that involves a claim that will affect the administration of a debtor's estate, but it does not arise under bankruptcy law and could be resolved in a state court. For example, a tort action between the debtor and a third party is a related proceeding.
In such cases, the related proceeding must be resolved in a federal district court unless the parties agree to bankruptcy-court jurisdiction or unless the district court refers the matter to the bankruptcy court or to state court. Related proceedings are also known as noncore proceedings.
Suppose a debtor is involved in a car accident and is sued by the other driver for damages. This is a related proceeding because it will affect the administration of the debtor's estate, but it does not arise under bankruptcy law and could be resolved in a state court.
Another example of a related proceeding is a breach of contract claim against the debtor by a third party. This claim will affect the administration of the debtor's estate, but it does not arise under bankruptcy law and could be resolved in a state court.
These examples illustrate how a related proceeding is a legal case that is related to a bankruptcy case but does not arise under bankruptcy law and could be resolved in a state court.