Insolvency Practitioners can be Mediators

by Lawrence King

In this article, Lawrence King, one of our Panel Mediators, explains the particular importance of mediation and alternative dispute resolution in insolvency and why he took the course to become an ADR Group Accredited Civil and Commercial Mediator in October 2018.

Firstly, what is mediation?

“The ADR Group summarise mediation as ‘an effective method of resolving disputes between two or more parties.’ The Mediator, a neutral independent qualified professional, assists all the sides in negotiating a mutually agreeable settlement.

Participation in mediation is voluntary and the process is private and confidential and it brings structure that ordinary negotiation lacks. The decision to settle and the terms of an agreement rest solely with the parties themselves, not the mediator.”

Secondly, what is insolvency mediation?

“Insolvency Mediation is where various parties to a dispute (for example creditors and company directors or a liquidator and a director) work to negotiate an arrangement regarding an insolvent company that all parties can agree to. This will avoid the need for lengthy and possibly costly litigation, which could end up in Court. The mediator is a third party who works as the intermediary between the two parties to facilitate the agreement to be made.

Insolvency disputes can easily, and often do, escalate into litigation, and I have found mediation to be a great tool to resolve such disputes quickly and efficiently.”

Why did I become a Mediator?

“As a Licensed Insolvency Practitioner, I have seen many times, at first hand, the risks and costs associated with insolvency litigation when a dispute between directors and creditors escalates. Insolvency, with all the stresses and strains that it can bring, often leads to disputes in many areas, including, but not limited to:

• 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

I have been party to many mediations as an Insolvency Practitioner, bringing the above actions against directors and other parties, and have seen the effectiveness of using mediation as a means of avoiding litigation.

I took the mediation course initially as a training exercise in October 2018. I found I enjoyed the work, had an aptitude for mediation, and I was delighted to pass the course first time. From that point on, whenever a dispute is likely, I always seek to deploy my mediation skills. I firmly support the principle of Alternative Dispute Resolution as an effective and efficient means of keeping a dispute out of court.”

You don’t need to be a solicitor to be a mediator

“The commonly held belief is that mediators need to be solicitors, barristers or retired legal professionals. Many are, of course, but you don’t need to be. Inevitably, in Insolvency Disputes, you need to have a good knowledge of Insolvency Law, which of course all Licensed Insolvency Practitioners do as part of their professional qualification. Add to that the accountancy training of most IPs, and it is easy to see why an IP can bring a different perspective to dispute resolution. In particular, the ability to condense complex legal and financial matters quickly is key.

At the heart of dispute resolution, of course, is problem solving and being able to communicate effectively. Mediation requires a pragmatic and commercial mindset to be able to act as a neutral intermediary between two parties who are locked in disagreement. In my experience, a good mediator also needs good listening skills and it is certainly not a case of deciding who is right and who is wrong. There is no taking of sides, and the focus is always on reaching an agreement that both parties can live with.

To view Lawrence’s profile, click here.