Document Type
Research Memorandum
Publication Date
2018
Abstract
(Excerpt)
Federal Rule of Bankruptcy Procedure 2004 (“Rule 2004”) provides that “[o]n motion of any party in interest, the court may order the examination of any entity.” By its terms, the rule is broad. It is only marginally narrowed by Rule 2004(b) to require that examinations “relate only to the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor's estate, or to the debtor's right to a discharge.” Given that Rule 2004 is broadly available in bankruptcy cases to “any party in interest” and that the target of the examination is unconstrained by any categorization, courts apply a balancing test to determine whether to grant a Rule 2004 motion. This memorandum explains that balancing test by examining the limitations imposed on an invocation of Rule 2004. Part I provides an overview of Rule 2004. Part II analyzes the elements of the balancing test and reviews how courts have applied the test to bankruptcy cases. Part III examines the “pending proceeding rule,” which prohibits a party from circumventing the more stringent discovery rules under the Federal Rules of Civil Procedure in favor of the more liberal Rule 2004 when the parties are engaged in litigation.