Bankruptcy Mediation Attorneys in Pittsburgh, Pennsylvania

Mediation in Bankruptcy Court

The Alternative Dispute Resolution Act in 1998 addressed questions concerning the bankruptcy courts' authority to order parties to mediation. The Act provides that all federal district courts are authorized by local rules in all civil cases, including adversary proceedings in bankruptcy to utilize Alternative Dispute Resolution proceedings, which the most utilized is Mediation. This reference to district courts includes the bankruptcy court. Prior to the passage of the Act, courts which included bankruptcy courts could use the inherent powers granted to the courts to appoint individuals to mediate negotiations in reorganization plan cases, and in other cases to resolve litigation.

As a matter traditionally recognized courses of action prior to the mandates enacted in 1998, resolution of most contested matters and adversary proceedings was always through direct negotiation. Today, Mediation should be considered as the next step if direct negotiations break down.

There is a shared responsibility that a mediator needs to be selected by the parties to the issue in dispute. The choice of a mediator should be based on their knowledge of financially oriented issued that involve bankruptcy considerations and their reputational effectiveness in reducing the risks from an emotional atmosphere that is often customary when there is negotiation of bankruptcy issues. The mediator should be focused on the parties' real and practical problems that must be addressed, the costs and risks associated with having to fight through long and complicated trials and appeals and whether the issues in dispute can be subject to a global or partial determination.

Mediation has been utilized in several types of case; in particular, when dealing with in bankruptcy cases with complex multi-party chapter 11 reorganizations, preference and avoidance actions, objections to discharge other adversary proceedings, claim objections and other contested matters.