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| vol 4, num 3 | September, 2017 |
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| Update on Model Local Rules and Commentary |
Editor’s Note: The Mediation Committee of the American Bankruptcy Institute is always looking for ways to expand and enhance the role and use of mediation in resolving bankruptcy disputes. Don Swanson reports on two projects that are underway.
Local court rules on bankruptcy mediation are an interesting phenomenon. Progress has been made: Over the last half-dozen years or so, the percentage of bankruptcy courts that have adopted local rules on bankruptcy mediation has grown from approximately 50 percent to approximately 70 percent.
Yet, this 50-70 percent growth is a slow-moving aberration among dispute-resolution bodies of all types throughout the U.S. Nearly every other type of federal court and agency is covered by a local rule or federal rule of some type on mediation — and this has already been true for decades.
Bankruptcy courts generally have been slow adopters of mediation, although there have also been many early-adopter courts who’ve provided great leadership in this area, so the still-holdout courts tend to be a tad bit hardcore in their holdout positions. Excuses are rarely so direct as, “We don’t like mediation; we think it is a waste of time and money.” The excuses are more of a deflection — more like, “We bankruptcy judges in this district refer mediations to each other, so we don’t need local rules,” or “Any party can choose to mediate at any time, and they don’t need local rules to do so.”
But the 50-70 percent growth mentioned above is significant and is continuing. It places the holdout courts in a distinct minority. And the minority percentage continues to shrink.
One assistance our committee has provided along the way toward the 50-70 percent growth is our Model Local Rules on Mediation and related Commentary. These Model Rules and Commentary are a resource to any local court interested in adopting a new rule or expanding an existing rule on mediation. These Model Local Rules have been — and continue to be — a helpful tool in the percentage growth process. |
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| Recent History in Delaware and a Comprehensive Review of the District’s Mediation Rule |
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David D. Bird
New Castle, Del. |
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Editor's Note: David Bird, a retired clerk of the Bankruptcy Court in Delaware, provides his insight on recent history there and the ongoing review of the district’s local mediation rule.
The U.S. Bankruptcy Court for the District of Delaware has developed a culture of mediation to deal with its heavy caseload, beginning in 2004. It was at that time that then-Chief Judge Mary Walrath, after consultation with two other bankruptcy judges from other districts referred by the Federal Judicial Center, entered a general order to supplement Delaware's Local Bankruptcy Rule on mediation. The general order provided, among other things, that all preference actions were subject to mandatory mediation and that the debtor was required to pay the mediator's fee. At that time, Delaware had approximately 25,000 pending adversary proceedings. Over the course of the next three years, those adversaries, plus an additionally filed 19,000 actions, were reduced to a pending caseload of 3,600 through the use of the mediation process. This process continues today with the addition of
a comprehensive review of the district's mediation rule currently underway, which will be completed by the end of the year. |
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| Committee Proposes New Federal Rule |
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Our Mediation Committee has been pursuing, for some time, a proposed federal rule on mediation. Members of our committee have prepared a draft of a proposed Rule. It would be a new subsection to Fed. R. Bankr. P. 9019 and would provide standard language applicable to all bankruptcy courts on (1) authorizing the use of mediation, both voluntary and mandated, and (2) providing for confidentiality of the mediation process. All other mediation details will be left for local rules to fill out.
Members of our committee have been in contact with leading bankruptcy judges in this process, and they’ve found a positive reception to the need for such a federal rule.
Additionally, we believe that the legislative branch of the federal government has a keen interest in such a federal rule in light of existing legislation on the subject.
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| Committee to Host Free Webinar: Mega Cases and Avoidance Actions |
The committee is set to host a free webinar on Tuesday, September 12, at 1 pm ET. Registration is free and CLE is available in qualifying states.
This webinar will provide guidance for attorney advocates on how to select mediators, prepare themselves and their clients for mediation, and how to formulate negotiating strategies. Speakers will include tips for dealing with an impasse, and for ensuring that all parties have properly formulated a risk assessment. |
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©2017 American Bankruptcy Institute . All rights reserved.
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