Mediation and Bankruptcy is not one of the most common combinations we need to understand each in its own light. Mediation is another way through which a third person called the mediator tried to resolve the dispute between the parties involved.
Mediation and bankruptcy is not one of the most common combinations we need to understand each in its own light. Mediation is another way through which a third person called the mediator tried to resolve the dispute between the parties involved. Under mediation, mediator, which is not part of a dispute, not only offers its services to resolve disputes but also play an active role in talks made to resolve differences and disputes. According to Article 4 of the Convention of the Hague for the Pacific settlement of the 1899 dispute, the mediator function is to bring coordination in the opposing claims and resolving the problems of the parties by calming the angry and opposition feelings that apply between them.
Mediation although it may be used alternately with arbitration and other different resolution methods in many ways. First unlike arbitration, the mediation process does not place a mediator in a position where it can give commands to the parties and the second is relatively less formal than a traditional court system and arbitration. To introduce the idea of mediation in the legal avenue is not a new concept because mediation has become part of various provisions of the law. In these places, mediation is called a vital prerequisite for submission of a coat in court. As part 32 (g) real estate (regulation and development) Act 2016, Section (4) Company Law 2013, Section 4 of Industrial Dispute Act 1947 etc.
On the other hand, the bankruptcy process in India is managed by the bankruptcy code and bankruptcy 2016. Since its introduction, he has shown successful results in recovering money. Although the recovery rate is high, it has created a constant fear of the persecution among companies, especially small and medium enterprises (SMEs). Under normal circumstances, the time of bankruptcy of the company must be taken from the beginning to the end is 270 days. However, in most cases, fat exceeds more than a year due to a large backlog of cases that overcome the national company law court and also the process of taking time to decide whether to liquidate the company or to adopt a resolution plan. In 2020, the completion of the process under the IBC had drifted around 375 days for cases completed and 309 days for cases of liquidation. This schedule can be reduced further. And while the code was still struggling with the backlog there crashing into a Pandemic Covid-19. This creates a variety of new challenges before the overall code regarding the demand and supply chain disorders and low-cost sales and income caused by unprecedented locking. Furthermore, the APEX court has time and once again trying to expand the horizon of bankruptcy code in addition to the debt recovery procedure. All of these aspects together call the way in which we can not only meet the purpose of the code but also resolve disputes effectively. Suspension of the code for six months extending to the same period provides a tender opportunity to explore the way new resolutions and open the way for mediation.
Mediation has succeeded in achieving history when recently the Supreme Court refers to Ayodhya’s dispute for mediation. In addition, even in 2017 the Singapore government suggested mediation in cases of bankruptcy. The responsible committee suggests the use of the mediation center and strengthens these central-panels to form a mediator with cross-border restructuring backgrounds. The 2008 Lehman Brothers case is another classic example where at the end of 2009 eighty-five cases were transferred to the mediation process where 85% of cases touched the full settlement. In countries such as USA mediation emerged in the image for insolvency problems in 1986 when the bankruptcy court introduced a mediation program in California. Considering the success of the ADR example, the increasing number of bankruptcy cases, and strong litigation costs, legal regulations for the settlement of alternative disputes established. The main legislative lead towards the use of ADR in bankruptcy cases is the adoption of alternative dispute settlement acts in 1998, which requires each Federal District Court to approve ADR in ‘all civil actions, including the enemy process in bankruptcy. [i] Not so far, even in India National Law Appellate Tribunal Law ordered both parties at V.K. Parvinder Singh v. Intec Capital Ltd. & amp; Anr. [II] At the request of the advice learned for respondents appeared before the Mediator of Hon’Ble Mr. Justice (Retd.) A.K. Sikri, a former judge of the Supreme Court Hon’ble.
A large number of cases of delayed insolvency direct us to adopt mediation-friendly jurisdiction because it will be an instrumental step in reducing party arrears. Mediation must be embedded as an intrinsic element of the applicable legal culture so that it is felt by parties that can be involved in possible disputes for the first option or most preferred. Mediation in that sense must evolve in the long term under the aegis regulatory framework that is not necessarily dependent on court or judicial institution. However, at the present stage, there is no way to run the fact that the bench and the bar must fulfill important responsibilities towards achieving the goal of creating a proper mediation strategy.
Mediation is a healthy process in which both parties can prioritize their views without facing winning pressure or losing the battle. This allows them to not only resolve their disputes but increase alliances between the parties for future business models as well. Decisions achieved during mediation are acceptable because they are not forced but come out as agreements that are consensus with the parties. Mediation has the ability to provide economical and fast solutions for problems that occur between the parties. Other characteristics to consider when we discuss mediation in case of bankruptcy is that, unlike formal processes, not all creditors must be part of the resolution. This means meditation requires minimal participants i.e. The main debtor and creditor that started the process. Take US examples, where ADR is used in three contexts for bankruptcy disputes. First to resolve disputes and reach consensus regarding the plan of reorganization. Second for a single and last creditors’ disputes for double-creditors claims with the same nature. It also brings us to a new concept called “Cramdown”. However, it must be noted that Cramdown only occurred in ADR which was watched by the court. This is a judicial power to confirm or oppose certain creditors. Thus, when the debtor agrees with several creditors, other creditors cannot challenge the agreement and must obey it. In other words, if the peaceful settlement that ends the dispute is not confirmed by the court, it has no effect on creditors who are not parties in the agreement.
CONCLUSION
The objectives of The Insolvency and and Bankruptcy Code 2016 has been removed from the start and for the full achievement of these objectives, it will be very important to adopt the mediation process. Mediation is undoubtedly a beginner field in a country like India which stands second in a massive population line and has faced economic threats because of its uneven distribution of wealth. Mediation together with various online aspects not only proven effective during pandemic but also in the long term when we face new financial challenges every day. With technology developing at fast speed, e-mediation has the potential to take it immediately. The total mediation products and formal bankruptcy procedures have the potential to ensure justice in the time of the time limit while allowing solution to cross-border disputes and jurisdiction.
