Court Order For Mediation Of Plan Confirmation Disputes (In re Garrett)

A mediation session? (photo by Marilyn Swanson)

By: Donald L Swanson

Every now and then, something happens that can serve as a model or form or checklist for similar situations. 

Chapter 11 plan confirmation disputes are often complex and involve multiple parties.  In the case of In re Garrett Motion, Inc., (Case No. 20-12212, S.D.N.Y. Bankruptcy), Debtors, the official unsecured and equity committees, and various other parties, are negotiating the terms of a plan of reorganization.  Negotiations bog down, so Debtor asks the Court to order the parties into mediation

On February 23, 2021, the Bankruptcy Court orders disputing parties into an electronic mediation (no one will attend in-person). The Court issues a nine-page Order addressing many mediation issues (see “Order Establishing Terms for Plan Mediation”—Doc. 954).  This Order might be helpful to other bankruptcy practitioners in dealing with a mandated mediation in other plan dispute cases.

What follows is a summary of the Bankruptcy Court’s Order.


  • The mediation is occurring upon Debtors’ request;
  • Legal authorities for the mandated mediation are section 105(a) of the Bankruptcy Code, Local Rule 9019-1, and General Order M452;
  • Disputes to be mediated include, (i) plan objections by the official committee of equity holders, (ii) Debtors’ proposed Plan Support Agreement and Equity Backstop Commitment Agreement, (iii) Debtors’ Motion to approve disclosure statement and establish plan confirmation procedures, and (iv) equity holders’ Motion to terminate exclusivity; and
  • A mandated mediation is in the best interests of all constituencies in the bankruptcy.


Accordingly, the Court orders the parties to proceed as follows:

  1. Currently scheduled hearings are continued to March 3, 2021 at 11:00 a.m. (ET), subject to further order of the Court.
  2. The following parties and their professional advisors are referred to mediation: (a) Debtors, (b) official committee of equity holders, (c) specified creditors and investors, and (d) official committee of unsecured creditors. 
  3. Any additional party who wishes to participate in the mediation shall be included if, (i) all mediation parties agree, or (ii) the mediator agrees that such party’s participation is necessary or beneficial.
  4. The Honorable Sean H. Lane is appointed as mediator.
  5. The parties shall participate in good faith.
  6. The mediation shall facilitate discussions on the terms of a plan, the Motion to terminate exclusivity, and related matters. The scope of the mediation may be expanded as identified by the mediator or as agreed by the parties.
  7. The initial session is to be held no later than Thursday, February 25, 2021, and shall conclude (unless extended by agreement) no later than March 2, 2021.
  8. The mediation shall be conducted via videoconferencing and/or teleconferencing, and no mediation party shall be required to physically attend an in-person session.
  9. The mediator may meet with the parties (and their advisors) individually and collectively and may direct the parties to informally exchange information.
  10. The mediator may conduct the mediation as he sees fit, subject to the terms of this Order.
  11. In addition to confidentiality provisions under local rules and General Order M452, the following shall be strictly confidential: all discussions among mediation parties or advisors, any statements by the Mediator, any materials, communications, draft resolutions, offers, and counteroffers.
  12. Mediation confidentiality does not extend to information that is available from a source other than the mediation.
  13. All oral and written information generated in the mediation process, including reasons for a termination of the mediation, shall be confidential settlement discussions under Rule 408 of the Federal Rules of Evidence and shall not be disclosed to any third party.
  14. Confidential information may be disclosed to the mediator, and such disclosure shall not be deemed a waiver of the applicable privilege, and the mediator shall not disclose such information to any other party.
  15. This Order does not determine whether any mediation materials are subject to any privilege, and nothing in this Order shall preclude any mediation party from seeking discovery at any time pursuant to applicable law—all rights are reserved with respect thereto.
  16. No written record or transcript of any discussion had in the course of the mediation is to be kept, absent express written agreement by the mediation parties.
  17. If any mediation party is requested (by subpoena, legal process, or otherwise) to disclose any confidential information, that party shall promptly notify the other mediation parties so they may seek a protective order. 
  18. The purpose of the mediation is to facilitate arm’s-length negotiations.
  19. No interested person shall have any claim, defense, objection, or cause of action of any nature against a mediation party based on that party’s participation in the mediation.
  20. Promptly after the conclusion of the mediation, the mediator shall file a report stating that the mediation has terminated, the outcome of the mediation, and advising the Court as to any lack of good faith of any of the mediation parties.
  21. Sanctions available under Fed. R. Civ. P. 16(f) shall apply to any violation of this Order and/or the provisions of Local Rule 9019-1.
  22. To the extent any part of this Order shall conflict with Local Rule 9019-1 or General Order M-452, the terms and provisions of this Order shall govern.
  23. This Court shall retain jurisdiction with respect to all matters arising from or related to the enforcement of this Order.


The findings and terms of this Order may be helpful for other practitioners dealing with the possibility of mediating plan confirmation disputes in other cases.

** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.

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