Mediation has gained general acceptance in the legal community but has been slow to take root in bankruptcy. See generally Geetha Ravindra, Reflections on Institutionalizing Mediation, 14 DISP. RESOL. MAG. 28, (Spring/Summer 2008). Over the past 20 years, mandatory bankruptcy mediation has become a feasible alternative to traditional litigation of adversary proceedings. In the beginning, creditors and debtors would mediate only if they agreed to mediate. As statutory authority for court ordered mediation strengthened, bankruptcy courts ordered parties to mediate with more regularity. Presently, mandatory mediation is statutorily authorized and bankruptcy courts have institutionalized the use of mandatory bankruptcy mediation, especially in adversary proceedings. The recent order by the bankruptcy court for the Eastern District of Michigan for mandatory mediation in Collin & Aikman Corporation’s chapter 11 reorganization exemplifies this growing trend of court-ordered mediation. 376 B.R. 815 (Bankr. E.D. Mich. 2007).
The following discussion presents an overview of the developments of mandatory mediation of preference actions, following by a discussion of the merits of mandatory mediation in preference actions in relation to creditors, debtors, and the bankruptcy courts.