Navigating Rule 2004 of the Federal Rules of Bankruptcy Procedure can be difficult for litigators, but with more and more lawsuits filed in bankruptcy court, it is important to understand its reach. It is understandable if litigators balk at first. Ordinarily in federal court, a party must first file a lawsuit and state an actionable claim before being entitled to discovery. In the bankruptcy system, however, an interested party has the ability under Rule 2004 to pursue discovery from a party prior to filing suit, and even has the ability to seek discovery to generate information for a lawsuit against the receiving party.
Although it poses challenges for parties who receive Rule 2004 subpoenas, and undoubtedly carries the potential for abuse, it does not give bankruptcy trustees and other interested parties a license for unlimited presuit discovery. There are six basic limitations on Rule 2004 examinations with which litigators should be familiar.
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