Mexican Legal Framework of Business Insolvency - White & Case

8. Proceeding
Insolvency regimes generally involve two types of proceedings: (1) reorganization; and
(2) liquidation. While some regimes allow for conversion from one type of proceeding to
another, oftentimes these are alternative proceedings. Mexico has opted to incorporate
both proceedings in the Insolvency Law in a successive manner (stages): A debtor declared
en concurso would first attempt to reach a reorganization plan and, if negotiations fail,
would thereafter be declared en quiebra. That is, the Insolvency Law provides for a single
insolvency proceeding, encompassing two successive stages. The first is the conciliatory
stage. The second is the liquidation stage [LCM 3]. Prior to a debtor being placed en
concurso, the process includes a preliminary visit stage to verify that the commencement
standards have been met [LCM 30-I].
9. Venue and Administration
The issue of venue and administration of the process is of particular relevance in connection
with the procedural aspects of the Insolvency Law.
16
In designing the insolvency law, it may be appropriate to consider the extent to which courts
will be required to supervise the proceedings and whether or not their role can be limited
with respect to different parts of the proceedings or balanced by the role of other participants,
such as the creditors and the insolvency representative. This is of particular importance where
the insolvency law requires judges to deal quickly with difficult insolvency issues (which
often involve commercial and business questions) and the capacity of the judiciary is limited,
whether because of its size, a general lack of resources in the court system or a lack of specific
knowledge and experience of the types of issue likely to be encountered in insolvency.
To reduce the functions to be performed by the court under an insolvency law, but at the same
time provide the necessary checks and balances, an insolvency law can assign specific functions to
other participants, such as the insolvency representative and creditors, or to some other authority,
such as an insolvency or corporate regulator. An insolvency law may provide that the insolvency
representative, for example, is authorized to make decisions on a number of issues, such as