Mexican Legal Framework of Business Insolvency - White & Case

More documents

Recommendations

Info

When a debtor experiences emerging problems (first stage), most of the solutions rely upon the debtor’s management-led corrective actions. Since, for nonfinancial sector firms, most of the cases at this stage have little or no impact on third parties, it is not relevant to delve into them from a legal framework perspective. When management is unable to resolve emerging problems, these could evolve into acute and worsening problems (second stage). At this stage, the debtor will try to reach an out-of-court workout plan with creditors. Part I addresses these issues. Part II addresses the court-assisted tools to solve cases of insolvency through reorganization or liquidation (third and fourth stages). The purpose of reorganization proceedings is to develop a reorganization plan. Since a private workout will only be effective upon consenting creditors, court assistance is sometimes necessary to achieve a successful reorganization or make broadly effective an otherwise private workout plan. The purpose of liquidation is to sell off the assets of the debtor and pay creditors with the proceeds of such sale. The line that divides reorganization from liquidation is often blurred (e.g., in the case of sales of complete lines of business or the whole enterprise as a going concern). Part III addresses special cases of insolvency of public service concessionaires and financial sector firms, other than banks. Part IV addresses the insolvency of banks. In the case of banks, even the emerging problems (first stage) could trigger “early warnings” that prompt preventive action from regulators. Other specific topics relating to sundry corporate and other legal issues arising in the context of insolvency are addressed in Part V. 8
PART I Out-of-Court Restructuring Out-of-court restructuring is aimed at securing contractual agreements, both between lenders themselves and between the lenders and the debtor, for the restructuring of the debtor. This type of restructuring is governed by scattered substantive and procedural rules, but mostly by internationally recognized principles of conduct and professional practice in the field. There are no binding rules as to how the process is conducted or what the final product will look like, so most private workouts are carried out in an ad hoc fashion. The author will, however, attempt to loosely follow the principles of INSOL (2000) and those of UNCITRAL (2005) to address the relevant legal aspects of a private workout. 1. Coordinated Approach The coordinated approach of creditors needs to overcome the inherent differences in the creditors’ attitudes and interests and in the nature of their claims. Not all creditors will have the same level of interest in the restructuring. For example, secured creditors may have a preference for liquidation, while unsecured creditors may prefer the continuation of the business as a going concern; some creditors with a big exposure may be willing to devote more resources to the workout process, while others may consider it not worthwhile due to the relatively small size of their claims. To complicate things further, a workout process presents a typical case of the prisoner’s dilemma: Creditors are better off if all creditors cooperate, but each creditor is better off being uncooperative. Coordination among different creditors and different constituencies of creditors reduces the risk of asset dilapidation caused, for example, by early moving creditors attaching assets; and the cost and time to achieve restructure, for example, by pooling advisors and sharing costs and by reducing emergence of miscommunication issues. 2. Standstill Agreement Participating creditors are expected to refrain from enforcing their claims during the negotiation period. This is achieved by entering into a standstill agreement. Standstill agreements may provide for undertakings by each creditor refraining from pursuing individual action against the debtor or its assets, challenging other participating creditors’ claims and White & Case 9
Page 1 and 2: Mexican Legal Framework of Business
Page 3 and 4: Mexican Legal Framework of Business
Page 5: Maria Teresa Fernández Labardini*
Page 8 and 9: PART IIISpecial Insolvencies ......
Page 10 and 11: 2 Consignment Consignación Coopera
Page 12 and 13: 4 Priority claim Crédito con privi
Page 15: Introduction All of a debtor’s as
Page 19 and 20: One of the risks that suppliers of
Page 21 and 22: Under either of the two approaches,
Page 23 and 24: . Prevention of Systemic Risk Anoth
Page 25 and 26: verification and admission of claim
Page 27 and 28: The issue is still divided between
Page 29 and 30: the debtor to arrive at a consensua
Page 31 and 32: v. Remuneration Specialists are ent
Page 33 and 34: after his death, if the creditors
Page 35 and 36: The above court precedent has two f
Page 37 and 38: 2. Voluntary Acceptance Small merch
Page 39 and 40: ii. Passive Estate Since a branch i
Page 41 and 42: For a debtor to be considered a hol
Page 43 and 44: ■■ Shutting down the enterprise
Page 45 and 46: ■■ The facts that motivate the
Page 47 and 48: filing such proofs of claim and ind
Page 49 and 50: 29 P. 161. i. Conservative Measures
Page 51 and 52: i. Disposition of Assets During con
Page 53 and 54: ■■ ■■ Granting of collatera
Page 55 and 56: All assets acquired by the concubin
Page 57 and 58: ■■ ■■ ■■ ■■ ■■
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
Page 89 and 90:
■■ ■■ ■■ ■■ ■■
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
Page 109 and 110:
■■ ■■ If, however, somethin
Page 111 and 112:
Capitalization is an important indi
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,
show all

Mexican Legal Framework of Business Insolvency - White & Case

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?