Mexican Legal Framework of Business Insolvency - White & Case

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23. Commencement Standards for Banks Administrative measures are subject to both the balance sheet test and the liquidity test (cfr. 11.a). These are triggered when (1) a bank’s capitalization index (cfr. 24) falls below 8 percent [LIC 28-V]; (2) the bank defaults under one minimum corrective measure, defaults under more than one special additional corrective measure or repeatedly defaults under one special additional corrective measure (cfr. 25) [LIC 28-IV]; or (3) the bank [x] defaults under obligations worth more than 20 million UDIs [A] deriving from loans from another bank, a foreign financial institution or Banco de México or [B] deriving from securities deposited with a securities clearing system; or [y] for two business days or more, with respect to obligations worth more than 2 million UDIs, [A] fails to pay balances resulting from compensation processes or fails to honor three or more checks or [B] fails to pay at two or more bank branches deposit withdrawals from 100 or more depositants [LIC 28-VI]. Administrative measures include (1) subjecting the bank to operation under a conditioned operation regime; or (2) resolving the bank. The type of bank resolution technique would depend on whether the bank in question is systemically important. Systemically important banks would be subject to healing or purchase-and-assumption techniques. Non-systemically important banks are subject to liquidation. 24. Capitalization Index Banks must have certain minimum levels of capital [LIC 50]. Capital requirements concern both the minimum equity capital and the net capital a bank must have. Equity capital is an absolute number, and its level depends on the scope of activities of the bank. Net capital is divided between basic capital and additional capital (similar to Tier I and Tier II under Basel I), and its required level depends on the level of risk-adjusted assets of the bank. 72 The level of net capital relative to risk-adjusted assets is referred to as the capitalization index, or ICAP [LIC 134 bis]. 72 Rules on capital requirements for banks, issued by the Ministry of Finance. 102
Capitalization is an important indicator of a bank’s financial health, a reduction of which, depending on its level, could (1) trigger “early warnings”; (2) entitle the bank to apply for a conditioned operation regime; or (3) subject the bank to a resolution process. 25. Early Warning Once a bank’s ICAP falls below 10 percent, such bank will be subject to minimum corrective measures or special additional corrective measures, depending on the bank’s actual level of ICAP. Minimum corrective measures include notifying the board of directors; submitting to CNBV a recapitalization program; suspending payment of dividends, interests of hybrid instruments and bonuses; and refraining from making capital investments. Special additional corrective measures include hiring external auditors; refraining from increasing compensation and entering into certain types of transactions; substituting officers, directors and auditors; carrying out transactions to reduce exposure to risk; and amending deposit-taking policies. 73 26. Conditioned Operation A bank with an ICAP below 8 percent (but higher than 4 percent) may apply to operate under a conditioned operation regime. To have access to the conditioned operation regime, the bank shall (1) request so to CNBV; (2) cause at least 75 percent of its shares to be placed in a trust; and (3) present a recapitalization plan [LIC 29 bis 2, 29 bis 3]. The trust referred to in (2) above shall allow the Institute for the Protection of Bank Savings, or IPAB, to exercise economic and corporate rights of those shares if (1) CNBV disapproves the recapitalization plan; (2) CNBV determines that the bank has defaulted under the approved recapitalization plan; (3) the bank’s ICAP falls to or below 4 percent; or (4) the bank meets any of the commencement standards mentioned in subparagraphs (2) or (3) of Section 23 above [LIC 29 bis 4]. 73 Rules on Article 134 bis of the Banking Law. White & Case 103
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Mexican Legal Framework of Business
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Mexican Legal Framework of Business
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Maria Teresa Fernández Labardini*
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PART IIISpecial Insolvencies ......
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2 Consignment Consignación Coopera
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4 Priority claim Crédito con privi
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Introduction All of a debtor’s as
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PART I Out-of-Court Restructuring O
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One of the risks that suppliers of
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Under either of the two approaches,
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. Prevention of Systemic Risk Anoth
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verification and admission of claim
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The issue is still divided between
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the debtor to arrive at a consensua
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v. Remuneration Specialists are ent
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after his death, if the creditors
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The above court precedent has two f
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2. Voluntary Acceptance Small merch
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ii. Passive Estate Since a branch i
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For a debtor to be considered a hol
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■■ Shutting down the enterprise
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■■ The facts that motivate the
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filing such proofs of claim and ind
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29 P. 161. i. Conservative Measures
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i. Disposition of Assets During con
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■■ ■■ Granting of collatera
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All assets acquired by the concubin
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■■ ■■ ■■ ■■ ■■
Page 59 and 60: ■■ ■■ Claims for an uncerta
Page 61 and 62: chattel 35 ) unless its price is pa
Page 63 and 64: c. Extensions of Credit An extensio
Page 65 and 66: the negotiable instruments and the
Page 67 and 68: epayment or abandonment shall apply
Page 69 and 70: ■ ■ Swaps: transactions in whic
Page 71 and 72: If the subject matter of the constr
Page 73 and 74: Netting of obligations in light of
Page 75 and 76: they function generally determine f
Page 77 and 78: . The Reorganization Plan The purpo
Page 79 and 80: extend to guarantors or co-obligors
Page 81 and 82: the reorganization plan); (3) all s
Page 83 and 84: If a debtor does not successfully c
Page 85 and 86: ii. Timing Removal takes effect leg
Page 87 and 88: Claims by creditors operate at two
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Page 91 and 92: predictability in commercial relati
Page 93 and 94: The receiver may oppose the foreclo
Page 95 and 96: ■■ A foreign proceeding is a co
Page 97 and 98: Conditioning the application of cro
Page 99 and 100: f. Enabling and Access The rules of
Page 101 and 102: 30, 31, 32, 33, 34, 35, 36, 37, 38,
Page 103 and 104: ii. Once Recognition Is Granted Onc
Page 105 and 106: concerning the coordination of proc
Page 107 and 108: 20. Non-bank Financial Sector Firms
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Page 113 and 114: A bank would be declared en concurs
Page 115 and 116: Bank restructuring through support
Page 117 and 118: 30. Purchase-and-Assumption A bank
Page 119 and 120: causes for dissolution has occurred
Page 121 and 122: [LCM 75]. The determination as to w
Page 123 and 124: 33. Securities Market 84 Holders of
Page 125 and 126: A reorganization plan would be enfo
Page 127 and 128: ■■ ■■ All kinds of animals
Page 129 and 130: Galindo (1957). GALINDO GARFIAS, Ig
Page 132: whitecase.com In this publication,
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Mexican Legal Framework of Business Insolvency - White & Case

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