Bankruptcy Alternative Dispute Resolution

In few areas of law does mediation provide as many benefits as it does in bankruptcy. A drastic increase in the amount of bankruptcy filings, the need to streamline bloated dockets, and hopes of reducing the increasingly high cost of bankruptcy litigation has forced bankruptcy judges and attorneys to seek out and employ various methods of alternative dispute resolution.

Alternative dispute resolution can reduce the strain on both the over-burdened court system and litigants’ monetary bottom-line by providing fast and inexpensive ways to avoid traditional bankruptcy litigation.

Disputes asserted by Chapter 7 trustees and parties in adversary proceedings concerning preference, avoidance, non-dischargeability, fraudulent conveyance and claims allowance actions are frequently mediated.

Bankruptcy mediation is also useful for resolving multi-party disputes and discrete issues in all types of contested matters such as valuation, interest rate and state law specific disputes.

Jerry D. Goldstein has represented debtors, creditors and third parties in many districts over seventeen years of practice. His involvement in all size and all chapter bankruptcies, along with extensive adr training, makes him uniquely qualified to act as a mediator and arbitrator in bankruptcy matters.

Reducing costs are particularly important within the bankruptcy context. In bankruptcy, litigation costs for the debtor come out of property of the estate. Every dollar that comes out of property of the estate is a dollar out of the pockets of the creditors. As a result, creditors have an even greater sense of urgency to solve problems as cheaply as possible, for they are paying for both sides of the litigation.

Mediation can be a useful tool in a bankruptcy judge’s toolbox in order to resolve large bankruptcy claims, especially in cases of mass-tort litigation. Because bankruptcy courts are unable to hear personal injury claims, each tort claim or class action may have to be independently tried all over the country. Mediation has proved quite effective in resolving mass tort problems in the bankruptcy context. Where once the costly, length, and fragmented nature of mass tort litigation would threaten to completely destroy the possibility of Chapter 11 reorganization, the time and cost saving methods of mediation saved reorganizations where they would once die.