ABSTRACT

The purpose of this research paper is to examine the role of mediation in resolving disputes in cross-border insolvency, with a particular focus on the landmark case of Lehman Brothers Holdings Inc. Following its collapse in 2008, Lehman Brothers became one of the most complex insolvency cases in financial history, involving assets, creditors, and legal proceedings across multiple jurisdictions. This case provides a unique opportunity to explore how Alternative Dispute Resolution mechanisms, specifically mediation, can be structured to manage complex, multi-jurisdictional disputes efficiently and equitably.

The paper will begin by outlining the definition and challenges inherent in cross-border insolvency, including jurisdictional conflicts, enforcement issues, and the disparate legal frameworks of involved countries. Mediation emerges as a strategic approach within ADR, designed to streamline negotiations, reduce litigation costs, and preserve the business relationships often at risk in adversarial proceedings. The paper then further delves into the specific application of mediation within the Lehman Brothers case, where the U.S. Bankruptcy Court for the Southern District of New York implemented mediation procedures to address claims from creditors and counterparties. This analysis draws on primary sources, including the court’s 2014 ADR Order, which has mandated structured mediation for indemnification claims against Lehman’s mortgage loan sellers.

The Lehman Brothers case highlights some mediation’s benefits, such as confidentiality, cost-effectiveness, and efficiency, which are particularly appealing in cross-border contexts. By analyzing the procedural design and outcomes of Lehman’s mediation framework, this paper provides insights into best practices for utilizing mediation in global insolvency cases. Furthermore, the research paper will explore the implications of these findings for international insolvency law and will offer a perspective to enhance the effectiveness of mediation in future cross-border insolvencies. Ultimately, this paper argues that mediation not only expedites dispute resolution but also contributes to a more balanced and cooperative approach to managing the financial and legal complexities of cross-border insolvency.

Keywords: cross-border insolvency, mediation, Lehman Brothers bankruptcy, ADR (Alternative Dispute Resolution), international insolvency law, UNCITRAL Model Law, bankruptcy mediation, multi-jurisdictional disputes, insolvency proceedings, creditor negotiations.

Abbreviations: ADR – Alternative Dispute Resolution; LBHI – Lehman Brothers Holdings Inc; SDNY – Southern District Court of New York.

INTRODUCTION

As companies increasingly operate in numerous countries with assets in multiple jurisdictions, the likelihood of insolvency proceedings being limited to a single country in the modern global economy is unrealistic. Cross-border insolvency occurs when a company faces bankruptcy on an international scale. This situation creates unique legal difficulties since the parties — creditors, debtors — and assets are governed by the laws of multiple countries. The traditional domestic insolvency frameworks developed to deal with local matters are often inadequate for addressing the challenges of international insolvencies, especially when multi-jurisdictional interests and legal systems collide.

The failure of multinationals like Lehman Brothers, Maxwell Communications, and Jet Airways proves we need a common approach to cross-border insolvency. In these cases, courts in multiple jurisdictions struggled with competing claims, fashioned protocols for managing the assets and coordinated proceedings to try to eliminate the duplication and delay associated with competing identical proceedings while maximizing recovery to creditors. Yet effective international cooperation is vital, as cross-border insolvency risks fragmentation of proceedings and competing claims, and reduced creditor recovery from differing national laws and priorities frameworks[1]. Bruce Leonard, Co-ordinating Cross-Border Insolvency Cases, International Insolvency Institute (2001).

So, what exactly are cross-border insolvency proceedings?

Cross-border insolvency refers to cases where a debtor has assets, operations or creditor claims in more than one country, creating specific legal challenges over which jurisdictions can have charge, requiring cross-jurisdictional reserves. Unlike traditional insolvency proceedings governed by the laws of only one country, cross-border insolvency is a quagmire of conflicting national insolvency laws, each having its own principles, priorities, and procedural rules[2][3].

Individual countries enact their own insolvency regimes, based on local economic policy, legal traditions, and levels of creditor protection. This variability means differences can occur in the definition of insolvency, treatment of creditor claims and approaches to the distribution of assets. Indeed, as an example, some jurisdictions emphasize secured creditors to the detriment of all other stakeholders, while, in others, they rely on different recoveries for secured and unsecured creditors without regard to their position in the creditor hierarchy. The difference in national approaches is especially marked in cross-border cases, where courts and insolvency practitioners need to balance conflicting claims and policies to enable global efficiency in the management of debtor assets[4].

Such challenges have spurred international frameworks, including the UNCITRAL Model Law on Cross-Border Insolvency, to offer a concrete approach to managing cross-border insolvencies. Over 48 countries have adopted the Model Law, which attempts to harmonize procedures by encouraging recognition of foreign insolvency proceedings and cooperation across jurisdictions. It uses a “center of main interests,” which assigns a primary jurisdiction to supervise the main proceedings and coordinate with auxiliary jurisdictions. This model — labeled “modified universality” — attempts to balance respect for national sovereignty with the need to have an efficient, integrated approach to the assets on hand. (UNCITRAL Model Law on Cross-Border Insolvency, G.A. Res. 52/158, U.N. Doc. A/RES/52/158 (Jan. 30, 1998) [hereinafter UNCITRAL Model Law])).

However, not all jurisdictions are universalist. Some countries follow territoriality, under which each state exercises jurisdiction over the debtor’s assets located in its territory. Such may create administrative fragmented proceedings that do not operate interdependently with each other, thus growing difficulties in arriving at fair and efficient results in cross-border cases. Territoriality would generally favor local creditors and respect national policies at the risk of duplicative processes and unequal treatment of creditors across borders. This second dichotomy between universalism and territorialism explains the delicate balance nations try to achieve between cooperation and control in cross-border insolvency issues. (Bruce Leonard, Co-ordinating Cross-Border Insolvency Cases, Int’l Insolvency Inst. (2001))

Cases such as Maxwell Communications and Lehman Brothers illustrate how countries have attempted to bridge these differences through case-specific protocols and agreements encouraging cooperation without overriding national interests. In these instances, courts across jurisdictions, such as the U.S. and the U.K., used protocols to manage proceedings cooperatively, demonstrating how practical coordination can supplement international frameworks. (UNCITRAL Guide to Enactment and Interpretation of the Model Law on Cross-Border Insolvency, U.N. Comm’n on Int’l Trade Law, U.N. Doc. A/CN.9/442 (2009))

The Role & Advantages of Mediation in Cross-Border Insolvency Proceedings

In this context, mediation as a legal tool has emerged as an essential mechanism to address the complexities presented by cross-border insolvency and international debtor-creditor relationships. Its benefits, such as speed, low costs, secrecy, and ability to retain business partnerships, are particularly important in multi-country insolvency matters.

Speed and Cost-Effectiveness

The advantages of mediation are known to resolve disputes faster and more cheaply than litigation. In cross-border insolvency situations, where the legal process is complicated by multiple jurisdictions, mediation provides a cooperative, streamlined approach that minimizes delay and expense for debtors and creditors. This need for efficiency is especially critical in insolvency proceedings, which should maintain the debtor’s assets for better recovery. (Scott Atkins, The Role and Potential for Arbitration in Cross-Border Insolvency Disputes, 78 Disp. Resol. J. 183, 185 (2024); The UNCITRAL Model Law on Cross-Border Insolvency Comes of Age: New Times or New Paradigms?, 54 Tex. Int’l L.J. 273, 275 (2019).

Confidentiality

Confidentiality is one of the main strengths of mediation, especially insolvency issues with large private corporations. Insolvency can disclose sensitive financial data, and public litigation could tarnish a debtor’s reputation, creating added difficulty in keeping stable over the course of a corporate restructuring. Mediation, on the other hand, takes place in private, allowing the parties to discuss concerning information openly without the risk that it will become public, which in turn protects a corporation’s reputation and encourages the parties to negotiate in a more frank manner. The UNCITRAL Model Law on Cross-Border Insolvency Reaches Adulthood: Fresh Times or Fresh Paradigms? supra, at 276; Gerard McCormack & Wai Yee Wan, Cross-Border Insolvency and International Protocols: An Imperfect but Effective Tool, Int’l Insolvency Rev. 129, 131 (2023).

Sustaining Professional Relationships In the international context of cross-border insolvency, there are often existing business relationships between the stakeholders and the debtor, which they seek to continue reading. Mediation facilitates these relationships by encouraging a collaborative, non-adversarial method for resolving disputes. Unlike litigation, which can poison business relationships, mediation encourages cooperation between the parties, thereby allowing companies to preserve those relationships needed to successfully execute a restructuring and maintain the business going forward. Scott Atkins, The Role and Potential for Arbitration in Cross-Border Insolvency Disputes, 78 Disp. Resol. J. 183, 185 (2024), The UNCITRAL Model Law on Cross-Border Insolvency Comes of Age: New Times or New Paradigms?.

Challenges in Cross-Border Insolvency Mediation

1. Jurisdictional Complexities

One of the biggest challenge of cross-border insolvency, is to structure a bankruptcy in which different and sometimes conflicting bankruptcy laws from several jurisdictions will come into play. Each country has its own standards and priorities when it comes to the law, and this leads to disputes, both about which jurisdiction will take control of assets and about what will be done with the assets involved. For example, with the bankruptcy of the Lehman Brothers, the extensive financial network and worldwide operations involved a multitude of jurisdictions, each of which would have its own legal principles to take into consideration. Mediation also facilitated the resolution of jurisdictional challenges without having to engage in protracted litigation. Lehman Brothers ADR Procedures: Insolvency Mediation, Lehman Bros. ADR Procedures, Insolventiemediation.nl, Gerard McCormack & Wai Yee Wan, Cross-Border Insolvency and International Protocols: An Imperfect but Effective Tool, Int’l Insolvency Rev. 129, 131 (2023).

2. Recognition of Judgments

The enforcement of mediated settlements and arbitral awards is a great obstacle to face jurisdiction in cross-border insolvency. In contrast to arbitration where the New York Convention’s provisions on enforcement come into play, mediation agreements are not automatically recognized internationally. Even though the Singapore Convention on Mediation provides guidelines on the enforcement mechanism for a mediated solution, it is unlikely to be widely used due to the limited adoption of the convention. In the Lehman Brothers case, international contestants protested that the measures of a mediation approved in the US collided with their own local law, highlighting the risk posed by the enforcement of cross-border mediated agreements. Scott Atkins, The Role and Potential for Arbitration in Cross-Border Insolvency Disputes, 78 Disp. Resol. J. 183, 185 (2024); Lehman Brothers ADR Procedures: Insolvency Mediation, Lehman Bros. ADR Procedures, Insolventiemediation.nl,

3. Coordination Between Courts

Cross-border insolvency requires coordination between countries so that the courts do not reach inconsistent outcomes or duplicate steps to achieve the same result. The UNCITRAL Model Law on Cross-Border Insolvency encourages collaboration and mutual recognition between jurisdictions. This unevenness in application has led to conflicting outcomes in certain cases such as Lehman Brothers (re Lehman Brothers Holdings Inc.739 F.3d 94 (2d Cir. 2014). Mediation offers an alternative by establishing a space for creditor discussions away from more formal courtroom environments, thus lowering the chances of conflicting rulings. This enacts consolidation of disputes and creditor interests across borders, showing the value of mediation for a more efficient, coordinated outcome.UNCITRAL Model Law on Cross-Border Insolvency, G.A. Res. 52/158, U.N. Doc. A/RES/52/158 (Jan. 30, 1998); Norton Rose Fulbright, Mediation as a Bankruptcy and Insolvency Game Changer, Norton Rose Fulbright (Sept. 9, 2015

Mediation in Cross-Border Insolvency: In Practice

Cross-border insolvency cases present a complex legal landscape where creditors and debtors often face conflicting jurisdictional laws and regulatory requirements. Mediation effectively addresses these disputes outside of court, allowing parties to negotiate more efficient, flexible, and collaborative settlements than traditional litigation. By facilitating direct and confidential engagement between creditors and debtors, mediation saves time and resources while reducing the adversarial nature of insolvency proceedings, which is particularly beneficial for preserving long-standing business relationships. In re Lehman Brothers Holdings Inc., 408 B.R. 77 (Bankr. S.D.N.Y. 2009)

The Chapter 11 case of Lehman Brothers Holdings Inc. Case No. 08-13555 in the U.S. Bankruptcy Court for the Southern District of New York, overseen by Honorable Judge Martin Glenn, exemplifies how mediation can be applied in cross-border insolvency. In this case, mediation played a very important role in handling claims from a boundless network of about 6,500 creditors. The large number of creditors evidently presented significant challenges, as each had unique claims and priorities, often from different jurisdictions. Utilizing a structured ADR framework, the court employed mediation to effectively resolve these claims, avoiding drawn-out litigation across several courts and jurisdictions, enabling coordinated settlements that honored the interests of various stakeholders. In re Lehman Brothers Holdings Inc., 408 B.R. 77 (Bankr. S.D.N.Y. 2009)

The confidential nature of cross-border insolvency mediation restricts public access to detailed procedural information. Although confidentiality safeguards sensitive financial information and promotes open negotiations for the involved parties, it simultaneously limits insights into specific mediation practices and how we can practically navigate a cross-border insolvency scenario. Nonetheless, the Lehman Brothers case offers a unique glimpse into the functioning of mediation in a complex, multi-jurisdictional insolvency environment, illustrating how mediation can facilitate claim resolution, unify stakeholder interests, and accommodate diverse legal systems.

This section will explore the Lehman Brothers case alongside other significant cross-border insolvencies, focusing on how mediation has eased negotiations, minimized prolonged litigation, and fostered fair asset distribution. Through an examination of procedural orders, court-appointed mediator reports, and mediation protocols, this paper will show, by looking at the Lehman Brothers case, mediation’s influence on the efficiency and effectiveness of cross-border insolvency resolutions, emphasizing its importance in bridging jurisdictional gaps and overseeing large creditor networks.

The Lehman Brothers Case

The Lehman Brothers bankruptcy, filed in 2008, marked one of the most complex and far-reaching insolvency proceedings in financial history, necessitating innovative uses of mediation to handle its massive web of creditors and global assets. When Lehman Brothers Holdings Inc. filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of New York (the case became a critical testbed for Alternative Dispute Resolution methods, especially mediation. The magnitude of this insolvency, with over 6,500 creditors across multiple jurisdictions, presented unprecedented challenges in managing claims, coordinating international legal standards, and ensuring fair asset distribution. The court introduced ADR protocols to address these complexities, enabling mediation to streamline thousands of potential litigations into structured, mediated settlements, effectively preserving both judicial resources and creditor value. In re Lehman Brothers Holdings Inc., 408 B.R. 77, 83 (Bankr. S.D.N.Y. 2009).

1. Initiation of Bankruptcy Proceedings and Case Complexity

LBHI’s Chapter 11 bankruptcy filing on September 15, 2008, in the U.S. Bankruptcy Court for the Southern District of New York marked a turning point, becoming the largest bankruptcy filing in U.S. history. Lehman’s collapse sent shockwaves through global financial markets, revealing the vulnerability of highly interconnected, multinational financial institutions. The company’s vast operations spanned numerous jurisdictions, and its complex financial portfolio included over 1.2 million derivative contracts, involving approximately 6,500 counterparties worldwide. This extensive creditor base posed unprecedented challenges for asset management, as each creditor had distinct claims, interests, and legal rights, all rooted in diverse regulatory frameworks. The magnitude of Lehman’s creditor network made traditional litigation impractical; a courtroom-based approach would have required numerous separate cases across different jurisdictions, each with potentially conflicting outcomes, a process that would consume substantial time and resources while depleting estate value. See In re Lehman Brothers Holdings Inc., 408 B.R. 77, 83 (Bankr. S.D.N.Y. 2009); Norton Rose Fulbright, International Restructuring Newswire, Q4 2023.

To manage these complexities inherent in such global insolvency, the SDNY Bankruptcy Court implemented an ADR procedure that heavily relied on mediation to streamline claims management. Mediation allowed for a centralized, efficient approach that could address the volume and diversity of Lehman’s creditor claims while preserving estate assets. The court’s ADR protocol aimed not only to resolve individual claims efficiently but also to foster coherence across international creditor groups and avoid conflicting judicial outcomes that could disrupt the orderly administration of Lehman’s estate. The court’s decision to pivot toward mediation reflected a growing recognition of ADR’s potential to resolve high-stakes, multi-jurisdictional insolvency cases with greater speed, flexibility, and efficiency than conventional litigation. Mediation in the Lehman case became a pioneering example for managing sprawling cross-border insolvencies, demonstrating how ADR could be a powerful tool to bring together disparate parties under a unified negotiation framework. See Scott Atkins, The Role and Potential for Arbitration in Cross-Border Insolvency Disputes, 78 Disp. Resol. J. 183, 186 (2024); Lehman Bros. ADR Procedures, Insolventiemediation.nl.

2. Establishment of Mediation Procedures

Faced with the overwhelming litigation potential that accompanied Lehman Brothers’ unprecedented collapse, Judge James M. Peck of the SDNY Bankruptcy Court recognized the need for an efficient and strategic approach to resolve disputes outside the courtroom. He approved a structured ADR procedure tailored specifically for the Lehman case, focusing on mediation to handle the vast volume of claims, particularly those related to derivatives contracts and indemnification claims. These financial instruments represented some of the most complex claims, both legally and financially, and were tied to Lehman’s extensive network of counterparties, which spanned numerous jurisdictions. By centering the ADR process around mediation, Judge Peck aimed to expedite claim resolution and substantially reduce the litigation costs that traditional court proceedings would entail for both Lehman’s estate and its creditors. This ADR order mandated that parties first attempt mediation before pursuing litigation, reflecting a strategic shift towards collaborative dispute resolution in the high-stakes environment of cross-border insolvency. In re Lehman Brothers Holdings Inc., 422 B.R. 407, 415 (Bankr. S.D.N.Y. 2010); Buckley Sandler InfoBytes – In re Lehman Brothers Holdings Inc., et al – U.S. Bankruptcy Court for the SDNY – Redlined 2014 ADR Order (2014).

As outlined in the court’s 2014 amended ADR order, the mediation protocol introduced a phased structure that required parties to engage in pre-mediation communication before initiating formal mediation sessions. This pre-mediation stage allowed for preliminary information exchange and encouraged early settlement discussions, which helped reduce the caseload that would progress to formal mediation. Furthermore, the ADR order specified that mediation be conducted under strict confidentiality guidelines. This feature safeguarded sensitive financial information from public exposure and fostered open, cooperative discussions between Lehman and its counterparties. This confidentiality was crucial given the high-profile nature of Lehman’s collapse and the impact on global markets, as it allowed parties to explore settlement options without fear of damaging reputational or competitive interests. Buckley Sandler InfoBytes, supra, at 3; Norton Rose Fulbright, Mediation as a Bankruptcy and Insolvency Game Changer (Sept. 9, 2015), Amended Alternative Dispute Resolution Procedures Order, In re Lehman Brothers Holdings Inc., No. 08-13555 (Bankr. S.D.N.Y. June 23, 2014).

The ADR protocol in the Lehman case showed a forward-thinking use of mediation in cross-border insolvency, setting a precedent for addressing complex, multi-jurisdictional disputes through structured, non-adversarial processes. This approach minimized the fragmentation that often plagues global insolvency cases, helping to preserve Lehman’s remaining assets while delivering faster and more equitable outcomes to its creditors. In this context, Judge Peck’s use of ADR underscored mediation’s capacity to streamline claim resolution, unify diverse creditor interests, and prevent excessive legal entanglements in multi-national insolvency proceedings. Lehman Bros. ADR Procedures, Insolventiemediation.nl.

3. Appointment and Role of Mediators

The SDNY Bankruptcy Court recognized the need for expert mediators with extensive international finance and insolvency law backgrounds to manage the ADR process for Lehman Brothers’ sprawling cross-border insolvency. Given the case’s unprecedented scale—with over 6,500 creditors across multiple jurisdictions, the court-appointed distinguished mediators, including Peter Kamminga, Esq., Ph.D., an experienced panelist at JAMS, and Hon. Shelley C. Chapman, a U.S. Bankruptcy Judge for the Southern District of New York who oversaw numerous chapter 11 and cross-border chapter 15 proceedings. Kamminga, known for his expertise in mediation and arbitration, played a significant role in co-mediating several Lehman-related actions, including cases involving major international financial institutions. Judge Chapman, who managed Lehman’s primary Chapter 11 proceedings, brought judicial oversight and a wealth of experience in complex insolvency cases to the ADR framework. These appointments ensured that the ADR process was guided by mediators capable of handling the intricate legal and procedural challenges inherent in Lehman’s case. Mediator Bio: Peter Kamminga, JAMS, Profile: Hon. Shelley C. Chapman, Willkie Farr & Gallagher LLP,

These mediators acted as neutral facilitators, guiding Lehman’s creditors through the negotiation process and working to prevent adversarial conflicts that could have derailed settlement efforts. By fostering an environment of collaboration, Kamminga and Judge Chapman promoted open dialogue and compromise among creditors, which was crucial in maintaining engagement and building trust in the ADR process. Their efforts contributed to a more equitable and efficient resolution of claims, as the mediators skillfully balanced the diverse legal interests of creditors across various jurisdictions. This mediator-driven approach exemplified Mediations’ strategic use to resolve procedural and substantive differences in a cross-border insolvency setting. Buckley Sandler InfoBytes – In re Lehman Brothers Holdings Inc., et al – U.S. Bankruptcy Court for the SDNY – Redlined 2014 ADR Order, at 4-5 (2014).

Through mediation, Kamminga, Judge Chapman, and other members of the Mediation team unified creditor interests around shared goals, aligning them with the court’s mandate to preserve asset value and prioritize equitable outcomes. This approach minimized the risk of fragmented proceedings and enabled creditors to reach structured settlements that accounted for the wide array of legal and financial stakes involved. Their efforts set a new standard for mediator-led, multi-jurisdictional dispute resolution in high-stakes insolvency cases. Lehman Bros. ADR Procedures, Insolventiemediation.nl.

4. Coordination Through the Cross-Border Insolvency Protocol

With operations spanning numerous countries, Lehman’s global footprint required coordinated international cooperation, as assets and claims were subject to diverse legal systems. To manage these jurisdictional overlaps, the SDNY Bankruptcy Court worked with foreign representatives to establish a Cross-Border Insolvency Protocol, promoting communication and legal alignment across jurisdictions. The protocol coordinated actions between U.S. courts, the U.K., and other relevant jurisdictions, ensuring that mediation outcomes complied with local insolvency laws. This coordination allowed mediation to transcend jurisdictional challenges, demonstrating its effectiveness in bridging international boundaries and harmonizing legal processes in cross-border cases. In re Lehman Brothers Holdings Inc., 739 F.3d 94 (2d Cir. 2014); Gerard McCormack & Wai Yee Wan, Cross-Border Insolvency and International Protocols: An Imperfect but Effective Tool, Int’l Insolvency Rev. 129, 131 (2023).

5. Implementation of Mediation Sessions and Confidentiality

Under the court’s Mediation order, mediation sessions were organized to address claims from creditors, each with different levels of priority and jurisdictional bases. These sessions targeted derivatives and indemnification claims with prominent legal complexities and cross-jurisdictional issues. Confidentiality, an important aspect of the mediation process, enabled Lehman and its creditors to negotiate potential settlements without risking public exposure or reputational damage. This private negotiation environment brought about transparency, encouraging parties to communicate candidly and allowing mediation to proceed with a cooperative spirit rarely achieved in traditional litigation. Mediation as a Bankruptcy and Insolvency Game Changer, Norton Rose Fulbright (Sept. 9, 2015), In re Lehman Brothers Holdings Inc., et al – U.S. Bankruptcy Court for the SDNY – Redlined 2014 ADR Order, at 4-5 (2014).

6. Outcomes of Mediation and Settlement Achievements

By 2013, mediation in the Lehman case had resolved a significant portion of claims, demonstrating the effectiveness of ADR in a cross-border insolvency context. Records indicate that mediation led to settlements in approximately 93 out of 98 mediated cases, resulting in $1.39 billion being distributed to creditors. This outcome highlighted mediation’s role in facilitating swift, fair resolutions that might not have been achievable through litigation. The success of mediation in the Lehman case set a precedent for using ADR in complex insolvency scenarios, supporting coordinated asset distribution and creditor satisfaction. Lehman Bros. ADR Procedures, supra.

Conclusion & Thoughts

The structured ADR and mediation protocols implemented in the Lehman Brothers case have reshaped the landscape of cross-border insolvency management, providing a template for handling complex, multi-jurisdictional bankruptcies. This landmark case highlighted the practical advantages of mediation in addressing jurisdictional conflicts, harmonizing creditor interests, and achieving enforceable settlements efficiently and equitably. The mediation enabled Lehman’s estate to avoid the costs and delays associated with traditional litigation by streamlining claims resolution and minimizing the procedural entanglements typical of cross-border disputes. Moreover, the confidentiality afforded by mediation preserved trust among stakeholders and protected sensitive financial information, which was critical in maintaining stability during negotiations. In re Lehman Brothers Holdings Inc., 422 B.R. 407, 415 (Bankr. S.D.N.Y. 2010); Norton Rose Fulbright, Mediation as a Bankruptcy and Insolvency Game Changer (Sept. 9, 2015),

Today, the Lehman Brothers case is a landmark case for cross-border insolvency mediation practices, showing the benefits of combining ADR with international frameworks like the UNCITRAL Model Law on Cross-Border Insolvency. While this model law encourages judicial cooperation across jurisdictions, its integration with mediation protocols ensures a more streamlined and flexible resolution process. Furthermore, frameworks like the Singapore Convention on Mediation have the potential to enhance the enforceability of mediated agreements, addressing one of the remaining challenges in cross-border insolvency mediation. If widely adopted, such frameworks could further solidify mediation’s role as a viable alternative to litigation in managing multinational insolvencies. International Restructuring Newswire, Norton Rose Fulbright, Q4 2023; The UNCITRAL Model Law on Cross-Border Insolvency Comes of Age, 54 Tex. Int’l L.J. 273, 278 (2019).

Is Mediation a Viable Option in Cross-Border Insolvency?

Mediation is undeniably an effective method for addressing disputes in cross-border insolvency cases, as demonstrated by its success in the Lehman Brothers case. The flexibility of mediation enables it to fit the varying legal systems and creditor interests present in multinational insolvencies. In contrast to litigation, which can intensify jurisdictional issues and delay asset recovery, mediation promotes cooperation and facilitates quicker resolutions. Mediation confidentiality safeguards sensitive financial data, preserving the essential trust needed for fruitful negotiations. Lehman Bros. ADR Procedures, Insolventiemediation.nl,

However, mediation’s effectiveness depends on the existence of supportive legal frameworks. For example, the Singapore Convention on Mediation addresses the enforceability of mediated agreements, a critical challenge in cross-border disputes. When integrated with frameworks like the UNCITRAL Model Law on Cross-Border Insolvency, mediation becomes indispensable for harmonizing creditor interests, ensuring equitable outcomes, and reducing procedural delays. While challenges remain, the Lehman Brothers case illustrates that with well-structured protocols and expert mediators, mediation can successfully manage the complexities of cross-border insolvency. International Restructuring Newswire, supra; Gerard McCormack & Wai Yee Wan, Cross-Border Insolvency and International Protocols: An Imperfect but Effective Tool, Int’l Insolvency Rev. 129, 131 (2023).

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[1] Bruce Leonard, Co-ordinating Cross-Border Insolvency Cases, International Insolvency Institute (2001).
[2] Gerard McCormack & Wai Yee Wan, Cross-Border Insolvency and International Protocols: An Imperfect but Effective Tool, Int’l Insolvency Rev. 129, 131 (2023
[3] Scott Atkins, The Role and Potential for Arbitration in Cross-Border Insolvency Disputes, 78 Disp. Resol. J. 183, 185 (2024)
[4] Priya Misra & Adam Feibelman, The Institutional Challenges of a Cross-Border Insolvency Regime, 2 Corp. & Bus. L.J. 329, 333 (2021)).

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Filip Ionescu
LLM candidate in International & Comparative Law at The George Washington University Law School