Bankruptcy to Discharge Litigation for a Business

Pending Litigation

• If a business is involved in a pending litigation, the filing of the bankruptcy case stops the proceeding. Assuming there are no complicating factors, the proposed debt will be discharged along with other debt of the business. The amount of the debt may be listed as "unknown" or "disputed" if the exact amount is under contention.
  
  

Judgments

• If litigation has already gone to judgment, the debt may still be listed in the bankruptcy and discharged accordingly. The debt is simply disclosed as a judgment and listed on the appropriate schedule of the bankruptcy documents.
  
  

Non-dischargeable

• Certain debts are non-dischargeable, such as those acquired through fraud. If such debt is listed in a bankruptcy, it may be subject to an adversary proceeding to determine whether it is dischargeable.