Insolvency Mediation – Insolvency Practitioners make good Mediators.
Lawrence King, Licensed Insolvency Practitioner, and an accredited civil and commercial mediator with ADR Group explains.
Lawrence, who is a partner at Antony Batty & Company, Thames Valley, qualified as a Licensed Insolvency Practitioner in 2010 and became one of ADR Group’s accredited civil and commercial mediators in October 2018. In this article, Lawrence explains the value of mediation in insolvency cases and why Insolvency Practitioners make good mediators.
Insolvency Practitioners can sit comfortably as mediators.
“Insolvencies frequently result in office holders bringing claims against various parties, which include directors, relatives of bankrupts, etc. These claims can often end up in disputes leading to litigation, with all the associated risks, stresses and costs of such legal proceedings. Typical types of dispute include:
- Wrongful trading claims
- Claims against directors
- Misfeasance claims
- Claims made between business partners
- Transactions at an undervalue
- Bankruptcy claims by a Trustee
- Disputes between companies and their insolvency practitioner or liquidator
When involved in these types of dispute, an Insolvency Practitioner will usually be willing to operate on a contingent basis, supported by a solicitor and barrister on a Conditional Fee Agreement or have the backing of a Litigation Funder. In addition, an IP may also have the benefit of an After Event Insurance Policy, which will provide them with the reassurance that they will not be liable for costs if they lose a case. Adding the above points together explains why insolvency disputes often proceed to final hearing.
As an Insolvency Practitioner (IP), I have a great deal of real-life experience – financial, legal and commercial – in understanding how and why these claims are made. This experience has come from difficult situations in different businesses across different sectors and that is an important part of being a mediator. Being a good listener and communicator is also key. With an acute understanding of an IP’s position and experience in these disputes, IP’s themselves are well positioned to be mediators. These experiences, I find, improve the whole process and help to achieve better outcomes.”
IPs are pragmatic problem solvers
“IPs must act in the interests of creditors and adhere to the spirit of the Civil Procedure Rules which place an emphasis on alternative dispute resolution. However, it’s not just about following a detailed set of rules and the legislation enshrined in the Insolvency Act 1986. IPs are also (and must be) problem solvers – professionals who act in a commercial manner to get the best outcome for stakeholders.
This approach means that IPs are well suited to the mediation role, and in my experience respondent parties often find mediation a useful tool to iron out and settle disputes with Insolvency Practitioners without the need for prolonged litigation. It’s also worth pointing out that Court proceedings don’t need to be issued to attend a mediation and it isn’t always necessary for a lawyer to attend a mediation.
Used properly – and in general, the earlier the better- mediation is an excellent process that saves money, saves time, gives certainty and avoids the angst and risks inherent in Litigation, so it is perhaps surprising that the uptake of mediation in insolvency proceedings has been generally slow.
Mediation is the way forward in many of the disputes I come across. It is, of course, important to choose the right mediator (searching ADR Group’s database of qualified mediators is the best place to start) In addition, setting the expectations of the clients, on both sides, before the Mediation Day, is vital. Overall, the benefits of settling at Mediation are enormous.”
Find out more about Insolvency Mediation
If you, or a client, are involved in an insolvency or general commercial dispute, and would like to avoid lengthy legal proceedings, bring the dispute to an early close, save money on legal costs and save yourself a great deal of stress, contact Lawrence on firstname.lastname@example.org or call him 01235 507001.
In the meantime, if you need our help and advice in any of our specialist insolvency areas, please contact us or call any of our offices, below, for a FREE initial discussion on the phone or over a coffee, with one of our Licensed Insolvency Practitioners.
Also, K&W Recovery, trading as Antony Batty and Company, Thames Valley: