Business Mediation in bankruptcy proceedings

Some may think that business mediation is limited to resolving conflicts before a lawsuit is filed or an arbitration begun. A little more broadly, mediation is certainly possible when a lawsuit is pending, before or during trial — or even during the appeal process.

A recent article in the Times-Standard of Eureka, CA is a good reminder that the mediation process can fit into almost any conflict situation. The article, Judge Orders Mediation in Palco Case, discusses the decision of a U.S. Bankruptcy Court judge to order creditors to attempt to mediate their differences regarding the reorganization of Palco (Pacific Lumber Co.) Two proposed plans are under consideration, and if a mediated agreement is not reached, hearings will begin and the judge will choose one of the two plans.

As is often true in a business mediation, the parties face some uncertainty about their BATNA (Best Alternative to a Negotiated Agreement.) If the bankruptcy judge chooses one plan over the other, there will be a clear winner and a clear loser. Each party’s uncertainty about who will be cast in which role is a major motivation to reach an agreement.

Posted in Business Mediation, Wednesday, April 30th, 2008

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