“The mediators’ record of accomplishment in this case establishes but one plan, one agenda, one bias—to settle as much of the case as they can and to do so tirelessly and selflessly.”
–Judge Steven Rhodes, responding to allegations of mediator bias, as quoted in “Detroit Resurrected: To Bankruptcy and Back,” by Nathan Bomey.
Allegations of mediator misconduct were raised during the City of Detroit bankruptcy case.
As mediated settlements began to occur in the Detroit bankruptcy, progress toward a confirmable plan began to gain momentum. After a while, only a few major creditors were holding out and impeding confirmation.
Nathan Bomey reports, in his “Detroit Resurrected” book, that these holdout creditors tried a new tactic, late in the process, to counter momentum toward plan confirmation.
–They “plotted an attack,” Bomey writes, “on the propriety of mediation sessions that culminated in a deal favoring unsecured pension creditors over unsecured bond insurers.”
–They filed an objection to the City’s bankruptcy plan, alleging the mediators are “agenda-driven” and “conflicted” and displaying “naked favoritism.” Their objection alleges that the mediators:
–“orchestrated” the mediation process “to maximize recoveries for politically favored, insider creditors”; and
–“were biased and conflicted from the beginning.”
Bomey reports that Judge Rhodes takes umbrage at such attacks, as shown by these statements from the Judge:
–“I was deeply disappointed” by the attacks and felt the attacks to be “totally unjustified.”
— The mediators “were in no position to ‘collude’ with anyone, to ‘orchestrate’ or ‘engineer’ anything, to ‘execute a transaction,’ or to ‘pick winners and losers.’ These allegations misunderstand the nature of mediation.”
–“As much respect and gratitude as the mediators deserve for their dedication and skill in their accomplishments in this case, they could not impose their will, their plans, their agenda, or their bias upon the parties through the mediation process, assuming they had any of those.”
Good for Judge Rhodes in supporting and defending his mediator team!
Such support worked. It is one of the critical reasons why mediation succeeded in the City of Detroit bankruptcy.