Mexican Legal Framework of Business Insolvency - White & Case

[LCM 75]. The determination as to what constitutes a transaction in the ordinary course
of business is fact-specific and must be made on a case-by-case basis.
Distressed M&A is an underdeveloped area of legal practice in Mexico. Aside from the
overriding principles of value maximization and the preservation of a going concern,
there are no clear rules on the permitted strategies for disposing of assets.
Arguably, any “363 Sale” (i.e., a sale during the pendency of the conciliation stage) would
only require the conciliator’s consent (with the approval from the conservators), which
is a more expedient procedure than seeking court approval, and no exceptions to the
general principles of law would be available in a disposition of assets during conciliation.
Mexico does not recognize theories of de facto merger, so the risk of successor liability
in distressed M&A transactions is basically nonexistent. 80
c. During the Liquidation Stage
The rules pertaining to M&A transactions during liquidation are addressed in
Section 16.d above.
The Federal Competition Commission, or Cofeco, the Mexican antitrust regulator, is
empowered to contest and penalize those transactions such as mergers, acquisitions
of control or any other act whereby companies, partnerships, shares, equity, trusts
or assets in general are concentrated by competitors, suppliers, or customers or by
any economic agent, with the purpose or effect of reducing, impairing or hindering
competition and free access to market in connection with equal, similar or substantially
related goods or services [LFCE 16]. As a preventive measure, prior to closing, for the
purpose of clearance, Cofeco must be notified of any transaction that meets or exceeds
certain statutory thresholds [LFCE 20].
80 There are some tax, labor and social security obligations that could follow the transfer of an enterprise as a
going concern.
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