Subchapter V Trustee: Initial And Subsequent Zoom Meetings–A Facilitation Tool

A Vise-Grip Tool

By: Donald L Swanson

The [Subchapter V] Trustee shall— . . . facilitate the development of a consensual plan of reorganization.”  11 U.S.C. § 1183(b)(7).

That’s what we Subchapter V trustees are supposed to do.

Ok, fine.  But how are we supposed to do that?

A facilitation tool that many Subchapter V trustees are using is this: Zoom facilitation meetings.

What follows is an explanation of how such meetings can work.

Initial Meeting

A week or two before the § 341 meeting, the Subchapter V trustee sends an invitation to Debtor’s counsel and all other attorneys of record to join, with their clients, in a Zoom meeting immediately following the § 341 meeting (e.g., if the § 341 meeting begins at 1:00 p.m., the Zoom facilitation meeting is scheduled to begin at 2:00 p.m.—or as soon thereafter as the § 341 meeting concludes). 

There’s a three-part agenda for the initial meeting:

  1. Debtor’s counsel discusses the strategy and plan;
  2. Creditors respond with thoughts and concerns; and
  3. Discussions ensue on what a consensual arrangement might look like. 

This initial meeting typically lasts a half-hour to an hour and focuses on two goals:

  1. Clarifying intensions of the parties; and
  2. Identifying issues to be resolved.

Note: “Resolving disputes” is not one of the goals for the initial facilitation meeting.  That’s because the initial meeting occurs early in the case, with lots of work yet to be done before disputes are resolved.

This initial meeting is proving to be highly effective in the plan facilitation process.

Follow-up Meetings

Further and final progress occurs in subsequent Zoom meetings.

The subsequent meetings typically occur when crucial matters (like a motion for relief from stay or plan confirmation) are getting ready for hearing.

As hearing day approaches, an invitation to disputing parties for a follow-up facilitation meeting is in order. 

The follow-up meetings can be short (like 15 minutes), focusing on issues coming to trial, resolution possibilities, and steps the parties need to take toward a resolution.  It gets the parties talking with each other and focusing on consensual possibilities.

Such follow-up meetings are proving to be effective in the plan facilitation process.

Joint Session

The Zoom facilitation meetings are best handled in joint session: i.e., with everyone on the Zoom call staying together at all times—as opposed to breaking out into caucuses, with the trustee shuttling offers and rationale back and forth. 

That’s because Subchapter V trustees have substantive duties (like taking positions on substantive issues) that eliminate the possibility of mediation-like confidentiality.  The joint session format recognizes that the only confidentiality expectation, in a facilitation meeting, is that of Federal Evidence Rule 408 (which prohibits admission of settlement negotiations into evidence).  

Conclusion

Zoom facilitation meetings, both an initial meeting (immediately after the § 341 meeting) and subsequent meetings (occurring as major events arise, like hearings on motions for relief or plan confirmation), are a helpful and effective tool in fulfilling the Subchapter V trustee duty to “facilitate” a consensual plan.

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