On Bankruptcy and Mediation
By: Donald L Swanson Historically, bankruptcy courts and bankruptcy professionals have been lagging adopters of mediation. They’ve been slow to utilize mediation for resolving bankruptcy disputes, and they’ve been slow to adopt local rules on mediation. Today, however, 76 (80.85%) of all 94 bankruptcy court districts have a local mediation rule of some type (see this... Continue Reading →
By Donald L. Swanson “The concept of a mediator going outside of the role of just settling a dispute and soliciting money to help settle that dispute is unprecedented in the history of bankruptcy and in the history of mediation as far as I know.” --Judge Steven Rhodes, as quoted in “Detroit Resurrected: To Bankruptcy... Continue Reading →
By Donald L. Swanson “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... Continue Reading →
It’s hard to say what might happen in other contexts.
By Donald L. Swanson A 2016 report on a mediation study looks at how a mediator reacts with participants. Specifically, the study evaluates what happens when a mediator: --reflects back to participants what the participants themselves express --focuses on a participant's feelings/emotions --focuses on a participant's underlying interests. Findings When a mediator does such things, participants... Continue Reading →
By: Donald L Swanson You’d expect, these days, that mediation confidentiality is enforced everywhere. But that expectation is wrong. Bankruptcy Hypothetical Let’s start with a bankruptcy hypothetical: Debtor is a small business in Chapter 11 and hopes to reorganize—not liquidate. Debtor reaches a mediated settlement with a large creditor, removing an obstacle to reorganization. Mediating parties... Continue Reading →
By Donald L. Swanson “Even if a plan emerged out of mediation that unfairly discriminated against financial creditors, it’s the court’s responsibility to block the deal.” -- Judge Steven Rhodes, as reported by Nathan Bomey in “Detroit Resurrected: to Bankruptcy and Back.” Judge Rhodes is defending his mediators in the City of Detroit bankruptcy against... Continue Reading →
By: Donald L. Swanson “There was a settlement . . . many arguments have been constructed to get around that unfortunate fact, but it’s a fact.” --Bankruptcy Judge, during hearing on Motion to enforce a mediated settlement in Lehman Brothers bankruptcy. It’s common in business bankruptcies for the estate to pursue preference and fraudulent transfers claims. Sometimes,... Continue Reading →
By: Donald L Swanson “Any district court that elects to require the use of . . . alternative dispute resolution in certain cases may do so . . . with respect to mediation.” Alternative Dispute Resolution Act of 1998 (28 U.S.C. § 652(a)). “I don’t feel comfortable requiring parties to mediate.” Ubiquitous sentiment among judges. I... Continue Reading →
