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American Bankruptcy Institute Law Review




Due to our current deep economic woes, growing bankruptcy filings, and apparent legislative unwillingness to expand the number of judges, bankruptcy courts are exploring the use of mediation to help resolve adversary proceedings, negotiate elements of reorganizations, and deal with claims that cannot be heard directly in bankruptcy proceedings. In addition, mediation advocates have been consistent in urging greater use of the process to reduce debtors’ and claimants’ costs, bridge the jurisdictional and standing challenges that bankruptcies can pose, and offer claimants the opportunity to be heard and determine their own resolution of claims. At this point, the relatively few judicial opinions currently available that discuss bankruptcy mediation demonstrate that bankruptcy courts generally favor the use of mediation to resolve claims and help with reorganizations. The cases also reveal, however, that some parties are attempting to use mediation to achieve unexpected and potentially inappropriate results and that bankruptcy judges, parties and/or their lawyers apparently expect mediators to do much more than facilitate the parties’ communication, negotiation and resolution. Sometimes, for example, judicial opinions reveal an assumption that mediators will make decisions – both procedural and substantive – and that in reviewing these decisions, judges should grant substantial deference to the mediators. Cases such as these suggest that the repeat players within bankruptcy do not understand how the role of the mediator is supposed to diverge in significant ways from the “traditional neutral” roles of trustee, special master, magistrate, arbitrator, examiner or judge. Though an appropriate response would appear to be education of the repeat players involved in bankruptcies, these cases also may signal that mediation will not always be the most appropriate vehicle for resolving issues within, or related to, bankruptcy. Instead, it may be that bankruptcy courts should both incorporate mediation in appropriate cases and consider expanding the availability or functions of “traditional neutrals”. In the bankruptcy context, that might mean experimenting with the use of trustees and examiners in innovative procedures that include, as one part of the procedures, facilitation of dialogue and consensual resolution. Importantly, bankruptcy courts would need to ensure that both trustees and examiners receive training in facilitation skills and procedures that will help them manage this new function appropriately and achieve both procedural and substantive justice.

Though divorce and child custody matters may seem far-removed from bankruptcy proceedings, liquidations and reorganizations bear some intriguing superficial similarities to divorces and ongoing custody and support arrangements (perhaps better termed “familial reorganizations” for purposes of this Article). In addition, an examination of the use, abuse and evolution of mediation in this area of practice may prove useful for those who are now introducing mediation into bankruptcy. For example, some commentators have recently begun advocating for a more limited use of divorce and child custody mediation, in part due to the emergence of new, hybrid dispute resolution models that confound any bright line distinction between consensual and adjudicative approaches. This Article begins to suggest options that would permit bankruptcy courts, repeat players within the system and their clients to skip a couple of the stages that were involved in the evolution of divorce and child custody mediation, provided there is willingness to consider the lessons of others’ history (or as this Article’s title suggests, “her/history”).

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St. John's University School of Law

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