The use of mediation is rising when it comes to addressing bankruptcy, particularly complex cases. A wide range of bankruptcy-related disputes is addressed across the United States through mediation. It includes disputes such as claim issues, valuation disputes, avoidance actions, disputes over lien priorities, post-confirmation litigation, confirmation issues and the like.
Some bankruptcy courts even make mediation a requirement, while other courts simply suggest or encourage mediation as a means for resolving disputes before opting for trial. As long as the dispute requires mediation, parties to the dispute can benefit from seeking a resolution through mediation such as if any necessary discovery has been completed or if the practical likelihood of an agreement warrants associated costs or delays, before extended litigation becomes necessary.
Parties that have taken the time to think mediation through will be better positioned for a successful mediation. Alternative dispute resolution methods like bankruptcy mediation ensure an equitable resolution as it takes both parties into account and their needs.
What Is Bankruptcy Mediation?
To better understand how bankruptcy mediation can offer an equitable resolution, one has to understand what bankruptcy mediation is. In simple words, it is a combination of two cultures, bankruptcy, and mediation. Although both offer an equitable resolution, yet they make their contribution towards the settlement.
Mediation focuses on party self-determination, while bankruptcy culture, on the other hand, places a priority on efficiency. When both are combined, bankruptcy mediation provides value to creditors and debtors trying to resolve bankruptcy conflicts. It promotes equitable resolutions for the qualified debtors that are in financial distress.
Now, each type of bankruptcy is different and that is why resolving a bankruptcy dispute can be difficult. Mediation offers both parties the following.
- A way to overcome impasses.
- Encourages a push between the parties.
- It helps focus the parties on settling the dispute, instead of being distracted from dealing with what matters.
- It allows the parties to deal with multiple moving parts to discover complicated issues.
- It provides a way for parties to preserve their relationship.
- It offers an opportunity for parties to consider not just their interests, but everyone else’s.
An Excellent Path to Resolution
Mediation is just as effective as the mediator. This is why it is important to choose a professional mediator who has experience dealing with bankruptcy-related matters. When you have a mediator such as a Nashville, TN Bankruptcy Mediator, he or she will take care of all the matters and guide you through the entire mediation process efficiently.
The equity interests and the creditors can have a different view of the debtor’s asset value. Valuation disagreements are a common scenario. The warring parties can resolve their issues with one another with the help of a professional mediator. A consensus can be achieved for an equitable resolution between the different parties.
Importance of Complete Bankruptcy Mediation Services
A bankruptcy mediator will offer a thorough knowledge of financial, legal and practical aspects of the dispute to the disputants with impartiality. The mediator highlights the importance of patience, diplomacy, and tact. Parties in sharp disagreement will be able to understand the benefits of a settlement with the help of a mediator. Moreover, the mediator will productively work towards an effective solution. Thus, bankruptcy mediation results in cost-effectiveness and saves time which eventually leads to successful reorganization of terms that are acceptable by creditors. It helps save up on significant losses after the liquidation of the remaining assets of the estate.
Choose a Professional Bankruptcy Mediator
One of the most important things to consider in bankruptcy-related mediation is whether to choose a former or current bankruptcy judge. Sometimes, it is wise to choose a practitioner to be the mediator. It can be difficult for parties to reveal weaknesses in their case when the mediator is a judge, but it would lead to the party appearing more favorably before the judge.
On the other hand, a practitioner might feel freer to express his or her opinions on the party’s position which might prove beneficial to facilitate resolution. However, when a judge states his or her opinion in meditation, it tends to be more compelling. Regardless of whether you choose a practitioner or judge for the mediation, you must choose a mediator with experience in bankruptcy-related matters.
Importance of Preparation
Parties of the mediation have a responsibility to ensure that it is conducted accordingly in an amicable manner. They can either help or hinder the chances of a mediation being successful through preparation. The parties need to walk into mediation knowing the goals, case and the capacity to compromise on matters. They must be prepared to present their case before the mediator. It is important to walk into mediation with a realistic view to avoid unrealistic expectations which would only further delay a resolution between the parties.
Evaluation of Strengths and Weaknesses
One of the most important aspects of bankruptcy mediation to ensure an equitable resolution is an understanding of the strengths and weaknesses of the case by each party. When a party understands its strengths and weaknesses with regards to the case, the greater the chances of an equitable resolution. To ensure effective mediation, consider the emotions, biases and unrealistic expectations and address them. Consult with a third party to get an unbiased opinion. Although the mediator would offer an unbiased resolution, parties can still ask other persons for their opinion before agreeing to the resolution.
Finally, one of the main reasons for the mediation is to build a consensus. Larger concepts should be discussed in a bankruptcy-related mediation before discussing the little details. Find out points that both parties can agree on through mediation early on in the process. It will help ensure that the mediation works towards resolving all other issues.
Unrealistic initial demands should be avoided and discouraged to achieve an equitable resolution between the parties. The reasons that motivate the parties to settle should be identified and understood. Each mediation session is unique and requires attention. For an equitable resolution, both parties must be serious about making a compromise and reaching a solution that benefits both of them.