Burdens of Proof in Bankruptcy Court
| Publication year | 1988 |
| Pages | 251 |
| Citation | Vol. 17 No. 2 Pg. 251 |
1988, February, Pg. 251. Burdens of Proof in Bankruptcy Court
As most practitioners know, the Bankruptcy Court has original and exclusive jurisdiction of all cases arising under the U.S. Bankruptcy Code ("Code").(fn1) The Bankruptcy Court also hears all cases arising in or related to Title 11 that are referred by the U.S. District Court to the Bankruptcy Court. These are known as core proceedings.(fn2) Thus, litigation that arises under some provision of the Code or that involves an asset or liability of the debtor or the debtor's estate may be heard in the Bankruptcy Court.
The Bankruptcy Court generally follows the common law rule that the burden of proof is upon the plaintiff/movant to establish his or her case by a preponderance of the evidence. However, the Code specifies the party who carries the burden of proof in certain instances, and case law has established a greater burden of proof for certain issues. This article discusses the allocation of the burden of proof and the standard of proof required in Bankruptcy Court litigation.
The Code specifically provides which party has the burden of proof in certain cases. For example, Code § 362(g), the Automatic Stay provision, states:
The party requesting such relief has the burden of proof on the issue of the debtor's equity in property;. . . [t]he party opposing such relief has the burden of proof on all other issues.
Under Code § 364, a trustee (or debtor-in-possession) may obtain credit or incur debt secured by a senior lien on property upon a showing, inter alia, that there is adequate protection of the interest of the holder of the lien on the property of the estate on which such senior lien is proposed to be granted. Section 364(d)(2) provides that "the trustee has the burden of proof on the issue of adequate protection."
Another example of the allocation of the burden of proof in the Code is found in § 502, Allowance of Claims or Interests, which provides: "A claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest,. . . objects." The filing of a proof of claim is prima facie evidence of that claim; therefore, the burden to go forward rests with the individual objecting to the claim or interest. However, the burden of persuasion rests with the claimant.
Code § 547, the section regarding preferences, provides that
the trustee has the burden of proving the avoidability of a transfer. . . and the creditor or party in interest against whom recovery or avoidance is sought has the burden of proving the nonavoidability of a transfer. . . .
In a few instances, the rules of bankruptcy procedure state which party has the burden of proof. According to Rule 4003, Exemptions, "the objecting party has the burden of proving that the exemptions are not properly claimed."
Rule 4005, Burden of Proof in Objecting to Discharge, provides that "at the trial on a complaint objecting to a discharge, the plaintiff has the burden of proving the objection." The Advisory Committee Note to Rule 4005 states that the "rule does not address the burden of going forward with the evidence." This is left to the courts and may depend upon "the difficulty of proving the nonexistence of a fact and of establishing a fact as to which the evidence is likely to be more accessible to the debtor than to the objector."(fn3)
Rule 6001, Burden of Proof as to Validity of Postpetition Transfer, requires that "any entity asserting the validity of a transfer under §549 of the Code shall have the burden of proof." (Code § 549 addresses postpetition transfers.)
Generally, the burden of proof is upon the plaintiff/movant to establish the case by a "preponderance of the evidence." Federal Jury Practice...
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