The Expert Podcast

Dispute mediation is not just for small claims or dog bite cases. It is used in very large corporate lawsuits, complex litigation between companies, and even international insolvency cases. Here's a case from a large cryptocurrency bankruptcy where the plaintiffs, the creditors, are saying, "Look, if you do not come to an agreement soon, we're going to demand mediation of this case."

What kind of numbers are we talking about? Well, this company, according to the article, held 5.1 billion in liabilities right before it filed for bankruptcy. This is a large case. One of their creditors is owed 1.5 billion dollars, and they want to pursue mediation. This demonstrates that mediation can handle very complex issues.

What would be the advantage for the plaintiffs? If they were able to go into mediation, a neutral, unbiased third party could look at the needs of both sides—the trustee of the bankruptcy and the creditors—and identify their mutual needs and objectives. A mediator can often help discover a pre-existing solution. Many times, the solution to a conflict is already there; the parties just don't see it because they're only looking at it from one side. A neutral third party can see the bigger picture, identifying existing solutions that the parties may not be aware of.

Usually, it's not that the parties don't want to solve the problem—they do. It may be that they’re not aware that the solution could benefit both parties simultaneously. However, the mediator must be an expert. They need knowledge of the industry and, in this case, expertise in complicated financial instruments, corporate debt, and possibly even bonding of companies with counter obligations.

Before filing for bankruptcy, there was no agreement on how Genesis, the debtor, would pay back its creditors. In negotiations, they went through 15 iterations of term sheets, but the lender was not interested in any of them. The creditors' attorneys stated to the court, "If we don't reach a conclusion by the end of this week, we will seek the appointment of a mediator."

Mediation has benefits for the bankrupt company as well. It can stop the clock on accumulating legal fees. Plus, anything discussed with the mediator remains private—it doesn't leave the four walls of the mediation. If they were in court, some records and documents might become public. A company may want to avoid public exposure to protect against liability—civil or criminal—or prevent embarrassing details about company records from being revealed.

By keeping mediation private, the process can accelerate resolution and significantly cut costs. Mediation avoids the need for lengthy litigation, making it a more efficient and effective way to resolve disputes.