• Cooper Shattuck

What Makes Mediation in a Bankruptcy Case Unique?

Mediation is an excellent means of resolving disputes. It allows parties to negotiate with the help of an independent, neutral, third party – the mediator. But a mediator should be more than a potted plant who silently passes offers back and forth. At the appropriate time in the process, a skilled mediator can help the parties explore their interests and potential settlements which are in the best interest of everyone involved. In a bankruptcy case, a knowledge of the underlying substantive issues is important, but so is a knowledge of the overarching paradigm in which those issues must be addressed – the bankruptcy.

Bankruptcy practitioners are knowledgeable of the bankruptcy process but may have limited familiarity or experience with other complex issues which might arise in a dispute involving a bankruptcy.

The list of substantive complex issues which may be involved in a bankruptcy case is as long as those involved in any other civil dispute, and may include:

  • Multi-district litigation (MDLs)

  • Class actions

  • Consumer fraud

  • Lender liability

  • Environmental claims

  • Toxic torts

  • Pharmaceutical claims

  • Compliance issues

  • Construction law

  • Federal contracts

  • Public works

  • Sureties

  • Wrongful death

  • Products liability

  • Dram shop

  • Aviation

  • Federal regulation

  • Mass torts

  • Employment claims


  • Benefits

  • Oil and gas matters

  • Healthcare

  • Intellectual property

  • Licensing

Likewise, someone familiar with the substantive issues at play in the underlying dispute may not appreciate the unique challenges of resolving that issue in the context of a bankruptcy case, with unique issues such as:

  • Chapter 11s

  • Debtor-in-possession

  • Debtor financing

  • Workouts

  • Plans of reorganization

  • Trustee’s claims

  • Involuntary filings

  • Plan approval

  • Claim prioritization

  • Chapter 7s

  • Liquidations

  • Fraudulent transfers

  • Preferences

  • Adversary proceedings

Having a mediator who is knowledgeable in the underlying substantive dispute and the bankruptcy context is critical to helping the parties explore all possibilities that may exist for a win-win resolution of disputes in a bankruptcy case. And making use of the same mediator throughout the life of a bankruptcy can save substantial time and costs for all involved. Few mediators have the experience necessary to accomplish this. But finding the right one is an investment in success.