In February 2015, the average number of bankruptcy filings was 3,422. Many filings are medical expenses which account for 62% of all personal bankruptcies, but a significant number of bankruptcies that are filed a commercial cases. About 90% of these that file for Chapter 11 bankruptcy have less than $10 million in assets and annual revenues and 50 or less employees. This can cause a company to do a substantive consolidation, which is best resolved in mediation.
What is bankruptcy substantive consolidation?
Mainly used in commercial cases, bankruptcy substantive consolidation takes a debtor and one or more of its affiliated companies and treats them as a single company. It will remove inter company claims and guarantees between the debtor and its consolidated companies and manages all assets of the consolidated companies and the debtor as a “common pool of assets.” A bankruptcy substantive consolidations will also treat the creditors claims as claims against the pool of assets instead of just against the debtor.
What are bankruptcy mediation services?
A mediator is a trained professional used as a neutral party to help settle disputes through mediation. Mediation is a process which allows the parties, guided by the mediator, come to a settlement without the formality of a third party deciding on a solution through evidentiary proceedings. It has been shown to be a method that is very effective for resolving dilutes without litigation being needed.
Filing for bankruptcy is complex, and can be even more difficult substantive consolidation is used by the debtor. Mediation is an effective method to use for bankruptcy cases, and can help resolve the case without a third party making a resolution that neither party agrees with. The mediator is trained to come to a solution that all parties can agree on, and will help make a plan to go forward with the solution.