In re: Triad Guaranty Inc.

Filing 7

Recommendation that Bankruptcy Appeal be withrawn from mandatory mediation. Signed by Judge Mary Pat Thynge on 2/4/15. (cak)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

In re: Triad Guaranty Inc.
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Triad Guaranty Inc.,
Appellant,
v.
Triad Guaranty Insurance Corp., et al.,
Appellee.

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C. A. No. 14-1464-GMS
Bankruptcy Case No. 13-11452 (MFW)
AP No. 14-41

RECOMMENDATION
At Wilmington this 4th day of February, 2015.
Pursuant to paragraph 2(a) of the Procedures to Govern Mediation of
Appeals from the United States Bankruptcy Court for this District dated September 11,
2012, by Order dated December 8, 2014, the parties were to advise in a joint written
submission their respective positions regarding mediation and the reasoning for their
positions, including whether the parties were previously or presently involved in
mediation or other ADR process. Consistent with that Order, the parties responded on
December 29, 2014. Appellant requested a teleconference to discuss the appeal and
the positions of the parties as set forth in their joint submission. Appellant felt that
mediation would be helpful to provide a basis upon which the parties could resolve the
appeal and permit the Appellant to propose a plan of reorganization. Appellees voiced

their opposite that mediation would not be helpful, noting the prior unsuccessful private
mediation that occurred on December 18, 2013, before Judge Walrath’s grant of
summary judgment on Appellees’ motion which is the issue on appeal. As a result, a
teleconference was held on December 30, 2014 for further review and discussion with
counsel to determine the appropriateness of mediation in this matter.
During the teleconference, Appellant related that it was in negotiations with a
third party investor and requested some time to continue its negotiations which had
involved exchanges of offers and demands. At that time, Appellant believed that
substantial progress could occur before the end of January 2015. Appellees opposed
Appellant’s request noting their concern regarding further delay. They felt that
mediation would not be successful and were concerned about the proposed April time
frame for mediation and that further delay would negatively affect them. The court
granted Appellant’s request, but required it to provide an update of its negotiation
progress by providing a copy of any executed term sheet and to make an demand to
Appellees as soon as possible. Appellant was also ordered to update the status of its
negotiations with the third party to the Court and Appellees by January 30, 2015. A
teleconference was scheduled for February 2, 2015.
Thereafter on January 30, 2015, Appellant’s update advised that discussions with
the third party were on hold and no definitive documentation of any proposal had
occurred. During the teleconference on February 2, 2015, Appellant advised it was
exploring its options and requested an additional thirty (30) days in which to consider its
options. Appellees opposed this request and reiterated its prior concerns regarding
delay, incurring additional expense for mediation, when the initial mediation was
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unsuccessful and the unsuccessful efforts of Appellant.
As a result of the above screening process, I find that the issues involved
in this case are not amenable to mediation and mediation at this stage would not be a
productive exercise, a worthwhile use of judicial resources nor warrant the expense of
the process.
THEREFORE, IT IS RECOMMENDED that, pursuant to paragraph 2(a)
Procedures to Govern Mediation of Appeals from the United States Bankruptcy Court
for this District and 28 U.S.C. § 636(b), this matter be withdrawn from the mandatory
referral for mediation and proceed through the appellate process of this Court. The
parties were advised of their right to file objections to this Recommendation pursuant to
28 U.S.C. § 636(b)(1)(B), FED. R. CIV. P. 72(a) and D. DEL. LR 72.1. Presently,
Appellant is reserving its right to file objections.
IT IS FURTHER RECOMMENDED at the parties’ request, that if this
matter is removed from mandatory mediation, the recently enacted amendments to the
Federal Rules of Bankruptcy Procedure, effective December 1, 2014, specifically Rules
8014, 8015 and 8018 be suspended as allowed under Rule 8028 to avoid
inconsistencies and to ensure that parties and the Court are operating under the same
procedures for purposes of this appeal. As a result, the parties request setting a
briefing schedule to begin after entry of an order by the District Court removing this
matter from mandatory mediation as follows: Appellant’s initial brief to be due twentyeight days thereafter; Appellees’ response to be due twenty-eight (28) days after
Appellant’s initial or opening brief; and Appellant’s reply brief to be due fourteen (14)
days after Appellees’ answering brief.
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Local counsel are obligated to inform out-of-state counsel of this Order.
/s/ Mary Pat Thynge
UNITED STATES MAGISTRATE JUDGE

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