Bankruptcy Mediation
July 10, 2019
Norton Journal of Bankruptcy Law and Practice
Types : Bylined Articles
Edward L. Schnitzer, the chair of our firm’s Bankruptcy & Financial Restructuring Group, published a scholarly essay entitled “Bankruptcy Mediation” in the June edition of the Norton Journal of Bankruptcy Law and Practice. His essay provides the historical background and statutory bases for the use of mediation in bankruptcy, while also discussing the basics of mediation in bankruptcy and its benefits. Ed’s article provides readers with examples of local rules governing mediation in different bankruptcy courts and discusses what types of bankruptcy disputes can be addressed by mediation. Ed also offers pointers on mediation confidentiality, mediator qualifications and training, mediator fees and mediator reporting. Lastly, Ed explains the mediation process including preparation, mediation statements, joint sessions and individual caucuses.
Bankruptcy Mediation, 28 No. 3 J. Bankr. L. & Prac. NL Art. 6
Mediation has become a mainstay in bankruptcies, particularly in New York and Delaware, and particularly for plan disputes, mass tort claim objections and adversary proceedings.
- Historical Background
Prior to 1998 and the adoption of the Alternative Dispute Resolution Act of 1998 (the “ADR Act”), the only statutory bases for a Bankruptcy Court to order mediation was section 105 of the Bankruptcy Code and Rule 16 of the Federal Rules of Civil Procedure (“Federal Rule”). Federal Rule 16 is applicable to adversary proceedings via Rule 7016 of the Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”) and optional for contested matters via Bankruptcy Rule 9014 . In 1993, Federal Rule 16(c)(2)(I) was revised to provide:
At any pretrial conference, the court may consider and take appropriate action on the following matters: … (I) settling the case and using special procedures to assist in resolving the dispute when authorized by statute or local rule …
“Special procedures” include mediation. Coupling the “inherent powers” of Section 105 and Federal Rule 16, bankruptcy courts had the ability to order parties to mediation on a case by case basis, but such ability was used sparingly. In 1995, less than 15 bankruptcy courts had formalized ADR programs.
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The full article can be found in the June 2019 Norton Journal of Bankruptcy Law and Practice; Volume 28, Issue 3. Bankruptcy Mediation, 28 No. 3 J. Bankr. L. & Prac. NL Art. 6
Reprinted from Norton Journal of Bankruptcy Law and Practice, Vol. 28 No. 3 (June 2019), with permission of Thomson Reuters. Copyright © 2019. Further use without the permission of Thomson Reuters is prohibited. For further information about this publication, please visit https://legal.thomsonreuters.com/en/products/law-books or call 800.328.9352.