This exercise is a six-party simulation of multiparty negotiations in a bankruptcy (reorganization) and mass torts context. The simulation represents a version of such negotiations which take place in the shadow of the Bankruptcy Code, with roles, interests and issues that have been stylized for educational purposes. In this exercise, a genetically-modified food producer has been sued by multiple consumers of its food products and is forced to file for bankruptcy protection in order to automatically stay (i.e., suspend) the flood of tort (i.e., personal injury) claims brought against the company, as well as those claims of the company’s secured and unsecured creditors. The company’s assets are “wasting” assets (i.e., they are deteriorating in quality, and therefore in value, rapidly). This means that the parties will have to reach an agreement quickly, if enough value is to be preserved to meet their diverse interests.

The simulation is primarily intended for use in a course on multiparty negotiations, though it also may be used in a bankruptcy course. It implicates such concepts as blocking and winning coalitions, BATNAs (Best Alternatives to A Negotiated Agreement), risk forecasting, and conflicting and compatible interests (the emotionally-charged and hard to reconcile interests of different kinds of creditors and a debtor).

This simulation requires at least ninety minutes to conduct: a ten-minute bankruptcy law background presentation (handout provided), ten minutes for individuals to read the general and confidential instructions and plan their strategies, five minutes of same-role strategic brainstorming, up to forty-five minutes of multiparty negotiation, and twenty minutes of in-class debriefing and discussion.

Participant Materials include:

• For all participants:
  • General Instructions
  • Student Handout: Negotiating in the Shadow of Bankruptcy
  • Negotiation Summary Sheet
• Confidential Instructions for:
• NoDrink, Inc.
• Secured Creditors
• Unsecured Creditors
• Severely Harmed Tort Claimants
• Slightly Harmed Tort Claimants
• Possible Future Tort Claimants