Case Summary

Asset-based lenders held a secured claim in excess of $80 million against an electrical generation plant constructed in Montana for a group of electrical cooperatives (5). The collateral had been valued at a number well below the indebtedness and the plant had proven to be of insufficient capacity for the needs of the cooperatives, forcing them to purchase power on the open market.

Challenges
  • The matter presented not only challenging economic and legal issues but also reflected significant cultural differences.
  • The legal entity that was formed to hold the plant (and which was owned by the cooperatives) filed a Chapter 11 petition in Montana. The lenders were represented by New York counsel, while the various cooperatives were represented by various Montana counsel.
  • Because of the decision-making structure of the cooperatives, virtually the entire governing board of each cooperative was present.
Mediated Resolution

Over the course of four days of intense mediation (spread over two sessions), the parties were able to arrive at a consensual resolution of their disputes, eliminating further threatened lengthy and expensive litigation and resulting in a consensual Chapter 11 plan.

Case Summary

A transoceanic shipping company registered in Greece owed in excess of $250 million to a consortium of European-based shipping lenders, secured by multiple vessels.

The shipping company filed a Chapter 11 petition in Houston, Texas (prior to the arrest of any vessels). After the lender’s unsuccessful attempt to lift the stay in bankruptcy court, the parties pursued mediation.

Mediated Resolution

After numerous intense and often acrimonious sessions conducted over a period of months, the parties were able to arrive at a consensual resolution of their dispute, resolving not only their legal and economic dispute but also bringing to resolution allegations made against professionals in the case.

Case Summary

An offshore oil and gas exploration company filed a Chapter 11 petition in Houston, Texas. The dispute centered around the allocation of equity to various creditors, which was made especially difficult by disagreements over valuation among the debtor companies.

Challenges
  • The company actually consisted of a group of companies, and its capital structure was somewhat complicated.
  • A number of funds held different (and in some ways competing) tranches of debt, some secured. The overall debt structure exceeded $3 billion.
  • The value of the company was hotly contested, especially in light of the volatility of the oil and gas market.
  • All parties had agreed that the only likely exit for the parties required a distribution of equity to most, or all, creditors.
Mediated Resolution

Mediation was conducted over a period of months, primarily in New York (the location of most of the professionals). The parties ultimately arrived at a consensual plan as a result of the mediation process.

Case Summary

A national retail electronics chain filed for Chapter 11 relief in Delaware.

Attorneys General around the United States opposed a proposed sale of the firm as it failed to contain consumer protections they deemed essential. They had filed multiple objections which would have required contested litigation before the sale could proceed.

Mediated Resolution

A mediation was conducted involving the debtor, the proposed purchaser, and the attorneys general from more than a dozen states. In the course of a day, a resolution was reached that was satisfactory to all parties, paving the way for an uncontested sale.

Dispute

A Chapter 11 case was filed in Denver, Colorado by an oil and gas exploration company with extensive production in the Bakken formation in North Dakota. After a sale of assets, a dispute arose over allocation of the proceeds among a fund that held a secured claim against various leaseholds and various service providers asserting liens to secure payment for their services in drilling and completing wells.

Challenges
  • The state of the law regarding the primacy of such liens against the asserted lender claim—and amongst one another—was at the time unsettled, with no case law to construe the statutory provisions.
Mediated Resolution

After two days of mediation in Denver, and some follow-up assistance, the parties were able to arrive at a consensual resolution that allowed a plan to be confirmed.

Case Summary

An oil and gas exploration company filed a Chapter 11 petition in Montana. The principal dispute was between an institutional secured lender and various oil and gas lien claimants, with the bulk of such liens arising under North Dakota law.

Mediated Resolution

After two days of intense mediation, most of it held in joint session, the parties were able to arrive at a consensual resolution of their disputes.

Dispute

A personal injury lawyer filed for bankruptcy relief. At issue was the appropriate disposition of contingent fees from various matters on which the lawyer and his former partner had worked.

Challenges
  • In addition to the unique issues surrounding the disposition of contingency fees under Texas law, there was a good deal of personal animosity between the parties.
Mediated Resolution

After an intense day of mediation, the matter was successfully resolved.

Case Summary

A cafeteria chain that had been purchased out of a bankruptcy encountered continuing difficulties and filed a new petition.The proposed plan was opposed by the unsecured creditors’ committee, many of whose members held claims from the previous bankruptcy proceeding.

Challenges
  • The committee was extremely concerned about the feasibility and certainty of repayment, given prior experience, while company management was unwilling to commit to personal liability.
Mediated Resolution

After an intense day of mediation, followed by further consultation with the mediator over the wording of the settlement documents, the matter was successfully resolved.

Case Summary

Two individuals who had been in dispute over a judgment debt for more than 10 years eventually sought mediation assistance.

Mediated Resolution

After a day and a half of mediation, the mediator held an open mediation to afford the parties a continued forum in which to continue discussions. After several months of continued mediator-assisted discussions, the parties were able to arrive at a resolution that finally put to rest this long-standing and unfortunate dispute.

Case Summary

An energy production and distribution company entered bankruptcy in Delaware. A dispute between the debtor and a California city, involving the delivery of clean energy to the city, was submitted to mediation.

Challenges
  • In addition to the debtor, a fund that held a significant amount of the debtor’s debt was involved in the negotiations.
  • The matter raised special legal issues of state and federal law associated with the delivery of clean energy to a municipality.
Mediated Resolution

The matter was ultimately resolved after a full day of mediation, employing some unique strategies to break the logjam.

Contact Judge Clark at lmclark@leifmclark.com for references or more information about any of the cases cited here.