Legal Definitions - related proceeding

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.