Fast cars and slow horses

Insolvency claims often throw up unique situations, can be hugely complex and are often replete with high emotion.  Just the kind of situation where the involvement of a mediator can prove extremely beneficial, enabling parties to reach settlement where earlier bi-lateral negotiations have failed.

A couple of years ago I mediated a case involving two young entrepreneurs. We got to the point of the mediation where the conversation switched from the merits of the case –‘who’s right and who’s wrong?’ – to the question of ability to pay. From merits to means, a change in the direction of travel that happens in many mediations, particularly those involving failed businesses.  The young entrepreneurs explained how they’d blown a few million pounds on fast cars and slow horses.  It sounded like a joke, but it wasn’t!  They were broke.

The look of disbelief on the liquidator’s face at the point when scepticism turned to realisation that the two young men sitting opposite him were honest but just incredibly foolhardy, said it all!  Hearing them tell their story - speaking their own words – as opposed to it being relayed through the filter of an advocate – turned their account into something unbelievably believable.

For an IP, talking can be a money-saver. No IP will want to spend money pursuing someone only to end up with a judgment that they simply can’t turn into cash.  If hardship is an issue, it’s best to hear about it sooner rather than later, even if it does involve fast cars and slow horses!

Even when there is an ability and willingness to pay, disharmony amongst those on the ‘paying’ side can knock meaningful negotiations sideways.  At a more recent mediation, it became clear that prior negotiations had gone nowhere because each of the pursued directors blamed another for the demise of the business.  That is what was consuming them, clouding their judgment and that created a barrier to meaningful dialogue with the liquidator.  For all sorts of reasons, it made no sense for  there to be a limited settlement; the litigation would proceed unless there was a global settlement.  The mediation process enabled the directors to negotiate independently of each other, in their own individual silo but, importantly, at the same time and in the same place.  The overall direction of travel was harmonised and a global settlement was achieved.