How Mediation Can Be Effective – Even When it Doesn’t Happen

Evading the mediator

By: Donald L. Swanson

Arch Coal, Inc., files bankruptcy on January 11, 2016.

By the month of May 2016, the debtor and its creditors are in contentious negotiations over terms of a Chapter 11 plan.  At one point, the parties think they have an agreement in principal, but things fall apart when putting settlement details on paper.

On June 23, 2016, the Official Creditors Committee moves for a Bankruptcy Court order “directing the appointment of a mediator.”   In the Motion, the Committee says this:

–“all of the parties appear to agree that consensus should be reached” on confirmation issues and that “such consensus is in the best interests” of everyone;

–the Committee “remains hopeful that even before this Motion is heard by the Court, the parties may resolve their issues.”

–mediation “could yield enormous dividends and avoid the long delay that would certainly result from a litigation Armageddon.”

On June 24, 2016, various parties file a “Joinder” in support of the Motion, saying this:

–“the parties are heading toward a long and costly litigation, involving a host of complex issues,” so the parties need to “make a final good faith attempt to resolve their disputes amicably and in an expedited fashion.”

The Court schedules the Motion and Joinder for hearing on July 6, 2016.

By July 5, 2016, the parties reach an agreement on plan confirmation issues, and the hearing on mediator appointment does not occur.

Now . . . all of this would seem irrelevant in my world, except for the fact that I’ve had a similar experience:

–I’ve been appointed mediator in a court-mandated mediation, only to have the parties settle before the mediation could begin.

In my appointment-without-performance situation, I didn’t know whether to feel flattered or offended, or neither, by the prompt settlement.  In fact, while typing this, I’m not sure whether I’m bragging or complaining.

So . . . there you have it: two anecdotes showing how mediation can be effective – even when it doesn’t happen.





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