Pre-Insolvency Negotiations Through Online Dispute Resolution Platforms

Overview & Synopsis

This Note discussess the usefulness of Online Dispute Resolution (“ODR”) systems in pre-insolvency situations. Traditionally used in bilateral contractual disputes, ODR also presents prospects for expanding access to justice in the insolvency field. Micro, Small, and Medium Enterprises (“MSMEs”) face particular challenges with regard to engaging in pre-insolvency procedures: often lacking financial literacy, facing bankruptcy-associated stigma, or having limited access to traditional proceedings due to geographical constraints. ODR may offer solutions for each of these problems. However, challenges remain in adopting ODR systems in an insolvency context. ODR has typically been used in two-party contractual disputes rather than complex multi-party insolvency negotiations, and many jurisdictions face a “digital divide” where segments of the population may be unable to access ODR mechanisms. This Note analyses these challenges and highlights several other issues that require further research.