What Makes Mediation in a Bankruptcy Case Unique?

Mediation is an excellent means of resolving disputes. It allows parties to negotiate with the help of an independent, neutral, third party – the mediator. But a mediator should be more than a potted plant who silently passes offers back and forth. At the appropriate time in the process, a skilled mediator can help the parties explore their interests and potential settlements which are in the best interest of everyone involved. In a bankruptcy case, a knowledge of the underlying substantive issues is important, but so is a knowledge of the overarching paradigm in which those issues must be addressed – the bankruptcy.

Bankruptcy practitioners are knowledgeable of the bankruptcy process but may have limited familiarity or experience with other complex issues which might arise in a dispute involving a bankruptcy.

The list of substantive complex issues which may be involved in a bankruptcy case is as long as those involved in any other civil dispute, and may include:

• Multi-district litigation (MDLs)

• Class actions

• Consumer fraud

• Lender liability

• Environmental claims

• Toxic torts

• Pharmaceutical claims

• Compliance issues

• Construction law

• Federal contracts

• Public works

• Sureties

• Wrongful death

• Products liability

• Dram shop

• Aviation

• Federal regulation

• Mass torts

• Employment claims

• ERISA

• Benefits

• Oil and gas matters

• Healthcare

• Intellectual property

• Licensing

Likewise, someone familiar with the substantive issues at play in the underlying dispute may not appreciate the unique challenges of resolving that issue in the context of a bankruptcy case, with unique issues such as:

• Chapter 11s

• Debtor-in-possession

• Debtor financing

• Workouts

• Plans of reorganization

• Trustee’s claims

• Involuntary filings

• Plan approval

• Claim prioritization

• Chapter 7s

• Liquidations

• Fraudulent transfers

• Preferences

• Adversary proceedings

Having a mediator who is knowledgeable in the underlying substantive dispute and the bankruptcy context is critical to helping the parties explore all possibilities that may exist for a win-win resolution of disputes in a bankruptcy case. And making use of the same mediator throughout the life of a bankruptcy can save substantial time and costs for all involved. Few mediators have the experience necessary to accomplish this. But finding the right one is an investment in success.