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Vol 13, Num 3 l June 2016

Bankruptcy Litigation

► In This Issue:

Letter from the Editor

ABI

Ferve E. Ozturk
BakerHostetler
New York

In this edition of the ABI Bankruptcy Litigation Committee Newsletter, we explore mediation of bankruptcy disputes.  The articles in this issue set out practical advice to mediators and parties on undertaking a successful mediation; discuss the role judges can play as mediators; and analyze a recent decision providing guidance on when mediation of contested matters in bankruptcy will be effective.  We hope that you will find these articles useful to your practice.

Ferve Ozturk
Bankruptcy Litigation Committee Newsletter Editor

Max My Mediation

ABI

Hon. Alan S. Trust
U.S. Bankruptcy Court (E.D.N.Y.)
Central Islip

For those of you who are new to mediation, know that it is a confidential, nonbinding process in which a neutral helps the parties find a solution to their disputes. While mediation has been gaining popularity in bankruptcy cases the past few years, to paraphrase Barbara Mandrell and George Jones, I am proud to say that I was mediating when mediation wasn’t cool. I received my mediation training in the early 90s, and in 1993 I wrote and delivered a speech for the Dallas Bankruptcy Bar Association in which I touted mediation as “a highly effective way to resolve civil disputes other than through a judge or jury at the courthouse.” Now, with grayer hair and a longer road behind me, I would like to share some suggestions from the mediator’s perspective that can help maximize your mediation.
» Read More

Maximizing the Value of Bankruptcy Mediation

ABI

Sylvia Mayer
S. Mayer Law
Houston

Autonomy. Flexibility. Privacy. Cost Efficiency. Closure. These are some of the many reasons that parties choose to mediate. But once the parties agree to mediate, then what? Below are suggestions to help you maximize the value of mediation in bankruptcy cases.

A. How to Get the Most Out of Your Mediation

Depending on where you practice around the country, mediation in bankruptcy may be the norm or highly unusual. Regardless of the frequency, the fundamentals to enhancing the return on your investment of time and money in mediation are the same.
» Read More

Mediation: Mother, May I?

ABI

Edward L. Schnitzer
Hahn & Hessen LLP
New York

ABI

Joseph Orbach
Hahn & Hessen LLP
New York

In many bankruptcy courts, using mediation to resolve complex disputes, or at least narrow issues in dispute, has become commonplace. In fact, in certain jurisdictions mediation of adversary proceedings is mandatory. However, one recent bankruptcy court expressed disapproval at the notion that every bankruptcy dispute should be mediated, and set forth the factors it will consider before allowing parties to expend any estate funds on mediating disputes.

In In re Cody Smith, the Chief Bankruptcy Judge Bohm of the Southern District of Texas issued an opinion questioning the need and efficiency of mediation in certain bankruptcy matters. Although the issue before the court was a Rule 9019 settlement motion, Judge Bohm took the opportunity to inform the parties of his displeasure at their actions in moving forward with mediation without first seeking the court’s approval.

The most interesting and informative part of the decision are the factors Judge Bohm required to be considered before authorizing parties to proceed with mediation. Specifically, Judge Bohm provided a nonexclusive list of 10 factors he considers in the context of approving mediations:
» Read More

When Judges Mediate: Perspectives on Reaching Successful Outcomes

ABI

Hon. Paul W. Bonapfel
U.S. Bankruptcy Court (N.D. Ga.)
Atlanta

ABI

Mark. M. Maloney
King & Spalding LLP
Atlanta

ABI

Thad D. Wilson
King & Spalding LLP
Atlanta

In recent years, bankruptcy judges — including the co-author of this article — have been mediating cases with more frequency. Parties in bankruptcy-related disputes often request that one of the local bankruptcy judges mediate their cases, or in other cases, that a bankruptcy judge refer a matter to a colleague for mediation. Having bankruptcy judges mediate disputes can be an effective and economical way to resolve contentious matters.

Of course, not all matters are suitable for mediation, and not all matters suitable for mediation will result in consensual resolution. In this article, and with the unique perspective provided by a judge mediator, we outline some of the factors and issues that often dictate or contribute to the result of a mediation effort.

Is It Ever Fruitful to Order Parties to Mediation?

When the parties have no interest in giving anything up in exchange for a consensual resolution, a successful mediation is a long shot, and ordering the parties to mediate is generally futile. But occasionally ordering otherwise-reluctant parties to mediation makes sense when the case appears well-suited based on the relative merits and the costs to conclude a full-scale litigation. In those circumstances, the presiding judge is essentially asking the lawyers to do their jobs — to properly explain the risks and costs to their clients and to make sure they are evaluating their cases objectively.

A judge may also be inclined to order mediation if the reluctant party is a trustee or debtor-in-possession with the duties of a trustee. Because a trustee (or debtor-in-possession) is an officer of a federal court, a bankruptcy judge (including one of the co-authors) may expect such a party to agree to mediate in view of federal policy that encourages mediation and order mediation over its objection.

Sometimes, however, emotions and egos are too entrenched — both of the lawyers and their clients. In such circumstances, ordering mediation may only add to, rather than minimize, the expense.
» Read More

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