Bankruptcy is ripe for the use of mediation since creditors are already intimately involved in the process.  Through mediation, the parties can all work together to achieve a settlement that they will present before the court.  There are steps that the parties involved can take to make the best settlement possible, including:

Use the Mediator’s Expertise

Bankruptcy mediators are commonly former bankruptcy judges, bankruptcy attorneys and business people familiar with the bankruptcy process.  This unique experience allows them to fully explain the process of bankruptcy to both the debtor and creditor.  Additionally, the mediator can rely on this experience when conveying each party’s position to the other side.  With this specialized experience, a mediator can quickly pick up on valid points and funnel this information to the other side in a productive manner.

Be Realistic

A mediator will urge all of the parties involved to have realistic expectations.  For debtors, it is important that they understand the bankruptcy process and what is at stake.  For creditors, it is important that they know where their claim falls in relation to other claims.  If a client continues to hold unrealistic expectations, the mediator may be more apt to deliver this message because he or she may appear more authoritative than the other parties or their respective counsel.

Think Outside the Box

One of the biggest benefits of mediation in any context is its ability to find creative solutions to the legal issue at hand.  When a complex bankruptcy is underway, the parties may consider bringing third parties in who may have insight or ideas about how the bankruptcy settlement should be worded.  There may be a buyer willing to purchase part of the debtor’s property that may be folded into the bankruptcy settlement and that allows the creditors to walk away with a little more.  Creative solutions often help tie the underlying interests of the parties with the ultimate resolutions that are made in the form of provisions in the settlement agreement.