Mexican Legal Framework of Business Insolvency - White & Case

. Prevention of Systemic Risk
Another driving principle of the Insolvency Law is to prevent the generalized default of
payment obligations from jeopardizing the continuation of the insolvent enterprise and
those enterprises with which it has dealings.
Some of the provisions of the Insolvency Law that embody this principle include its
favor for enterprise preservation (cfr. 6.a); the continuation of the enterprise and survival
of executory contracts (cfr. 15.n.iii); allowing setoff and netting during an insolvency
proceeding (cfr. 15.o); and the priority afforded to post-commencement financing
(cfr. 15.q). Another tool for preventing systemic risk is the settlement finality principle
in payment and securities clearance systems (cfr. 15.p) that is found in the Payment
Systems Law.
7. Universalism vs. Territorialism
There is broad literature on the different territorial approaches an insolvency statute can take,
which the reader is encouraged to consult. 6 It is beyond the scope of this book to address
these issues in any particular level of detail. At this point, it is sufficient to say that there
is some consensus among treatises that Mexico has embraced the universalism approach
(or, as García (2005) 7 puts it, a mitigated universalism approach). In the words of
ALI México (2003): 8
While the LCM continues to rely on the principles of unity and universality, these
principles are not stated expressly but implied throughout the law….
6 See, e.g., Trautman (1993) and other works referred to therein.
7
8
P. 107.
P. 107.
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