Southern District Establishes Standards for 'Good Faith' Participation in Court-Ordered Mediation

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The U.S. District Court for the Southern District of New York issued a significant decision on March 18, 2011, that elucidates a standard for what constitutes good faith participation in a court ordered mediation. The A.T. Reynolds & Sons, Inc. decision reverses the bankruptcy court's order holding the secured lender in the underlying bankruptcy proceeding, and its counsel, in contempt for failing to mediate in good faith and imposing sanctions upon them.

The district court's decision not only vindicates the lender and its counsel for its "no pay" position taken at the mediation, but also articulates a clear and objective standard for parties' future "good faith" participation in a court-ordered mediation.

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