Mediation at the Beginning of a Lawsuit — How it Works in Delaware

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Innovation: A great idea

By: Donald L. Swanson

It’s always great to see the leaders in any realm continue to innovate.

The Bankruptcy Court in Delaware is, most definitely, a leader on such matters as bankruptcy mediation. And this Court continually innovates.

In 2004, for example, the Delaware Bankruptcy Court adopts mandatory mediation for preference actions.  And a telephone-participation option is provided for cases with less than $75,000 at stake.

The Early-Mediation Innovation

In 2013, the Delaware Bankruptcy Court innovates  on mediation again.  This time the innovation includes an early-mediation authorization for preference cases.

Here are the early-mediation arrangements, which are contained in Local Rule 9019(j):

–In a preference adversary where the amount in controversy is less-than $75,000, a defendant may elect early-mediation within 30 days after an answer to the preference Complaint is due.

–The parties in larger preference cases may agree to participate in this early-mediation program.

–The mediation will include all non-preference claims asserted in the Complaint against the defendant as well.

–The local rules an mediation confidentiality apply to this process.

–All discovery and other proceedings in the adversary are stayed until conclusion of the early-mediation effort. If the mediation concludes without a settlement, the parties must meet and confer on details for a scheduling order.

–Prior to the mediation, each of the parties must submit a mediation statement to the mediator and opposing parties. This statement:

–must contain whatever information the mediator requires; and

–is not to be filed with or provided to the court.

–The mediator’s fee and other costs will be paid by the plaintiff (i.e., the bankruptcy estate, in most instances).

–A willful failure to attend a mediation conference, and any other material rule violation, may result in sanctions by the Court.

Conclusion

As times go by, it will be interesting to see what the impact of this early-mediation innovation might be on the disputes involved.

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