Canadian Lawyer

out a resolution before it happens. In some cases though mediation may not translate into lower legal costs. "If you're in com- mercial court in Ontario you have Justice Campbell who is a big supporter of media- tion," says Bobby Sachdeva, who heads up Pallett Valo LLP' "There's also a lot of self-mediation that s insolvency group. goes on. The court will certainly assist but I think mediation is far less frequent than in straight litigation files." In smaller cases the fees are going tion with those acting for trade creditors who feel it can be a skewed process in favour of secured lenders. "I think it' to be about the same, says Sachdeva, whether the lawyers are in court for four days fighting it out or in mediation for several days. "With mediation the longer it goes the more likely you're going to settle when you've invested so much in the process. The biggest difference is that with insolvency, by its nature you have a lot of meetings and discussions to keep things going. I think mediation is helpful in a larger restructuring where you have distinct issues with players. It' trying to mediate between 10 groups." work," says Kevin Fisher of Basman Smith LLP in Toronto. "To me the biggest prob- lem with the process is secured lenders are often in a different position than trade creditors who are unsecured. So much money is sucked up by the process because you've got the debtor, then a monitor or receiver who has counsel, the DIP [debtor- in-possession] lender has their own coun- sel, and then there' s a great idea when it can forbid you actually dispute those accounts. Often I tell my clients it' you spend a lot of time defending your position and usually don't succeed. s a lot harder just another process that takes a chunk of money that could have been used to pay the creditors. "The idea is that all the stake- holders get a better shake out of the system with mediation, but I think it depends who Fisher says mediation can become s not much left, and God s not worth it — " There's a different feeling about media- your clients are. It's the trade creditors who often get left out and they are the ones who keep the company going. I've seen it where the bank comes in as the DIP lender and they were the pre-insolvency lender and have worked things into their orders where they continue to collect interest on their old debt." For all of the benefits of mediation, the legal profession may still be largely inclined to choose the litigation route, says Sellers. "The profession still defaults to the old litigation model, but in the advanced cases with practitioners that have been around, we get mediated outcomes without having a court-ordered mediation. We have savvy counsel, advisers, and court-appointed monitors who get people in a room and start to approximate a way forward to achieve a deal, and it gets matters resolved. You still feel better about the outcome than having it imposed on you by someone else. It's definitely different from the black-and-white, you win, you lose in a court of law. " CollinBarrows_CL_June_12.indd 1 www.CANADIAN Lawyermag.com JUNE 2012 41 12-05-11 10:22 AM

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