Mexican Legal Framework of Business Insolvency - White & Case
Mexican Legal Framework of Business Insolvency - White & Case 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
verification and admission of claims, the need for post-commencement funding, surrender of encumbered assets of no value to the estate, sale of major assets, commencement of avoidance actions and treatment of contracts, without the court being required to intervene, except in the case of a dispute concerning one of these matters. The use of this approach depends upon the availability of a body of suitably qualified professionals to serve as insolvency representatives. Creditors also can be authorized to provide advice to, or to approve certain decisions of, the insolvency representative, such as approving the sale of important assets or obtaining post-commencement finance, without requiring the court to intervene, except in the case of dispute. An insolvency law can specify the decisions that will require court approval, such as the provision of a priority ranking above the rights of existing secured creditors to secure post-commencement finance. The court’s capacity to handle the sometimes complex commercial issues involved in insolvency cases is often not only a question of knowledge and experience of specific law and business practices, but also a question of that knowledge and experience being current and regularly updated. To address the issue of judicial capacity, a special focus on the education and ongoing training of court personnel, not only of judges but also of clerks and other court administrators, will assist in supporting an insolvency regime that has the ability to respond effectively and efficiently to its insolvency caseload. 9 The Insolvency Law adheres to the UNCITRAL (2005) recommendation to separate jurisdictional matters from administrative matters in an insolvency proceeding. The insolvency courts direct the proceedings and resolve all matters where passing a judgment or application of public force is required [LCM 7], while administrative matters within the proceedings are entrusted to insolvency experts authorized and appointed by the Federal Institute of Specialists in Commercial Insolvency, or Ifecom. A 2006 court precedent provides a clear perspective on this interplay between the courts and Ifecom: 9 INSOLVENCIES. AUTHORITY OF THE JUDGE GOVERNING THE INSOLVENCY PROCEEDINGS. The LCM Bill recognizes the need for the insolvency judge to be assisted in non-legal disciplines inherent to these types of processes, such as commercial, accounting, financial or administrative disciplines, and precisely attending the need to educate the judge in special UNCITRAL (2005), pp. 33-34. White & Case 17
- 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 and 16: Introduction All of a debtor’s as
- Page 17 and 18: PART I Out-of-Court Restructuring O
- Page 19 and 20: One of the risks that suppliers of
- Page 21 and 22: Under either of the two approaches,
- Page 23: . Prevention of Systemic Risk Anoth
- 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
verification and admission <strong>of</strong> claims, the need for post-commencement funding, surrender <strong>of</strong><br />
encumbered assets <strong>of</strong> no value to the estate, sale <strong>of</strong> major assets, commencement <strong>of</strong> avoidance<br />
actions and treatment <strong>of</strong> contracts, without the court being required to intervene, except in the case<br />
<strong>of</strong> a dispute concerning one <strong>of</strong> these matters. The use <strong>of</strong> this approach depends upon the availability<br />
<strong>of</strong> a body <strong>of</strong> suitably qualified pr<strong>of</strong>essionals to serve as insolvency representatives. Creditors<br />
also can be authorized to provide advice to, or to approve certain decisions <strong>of</strong>, the insolvency<br />
representative, such as approving the sale <strong>of</strong> important assets or obtaining post-commencement<br />
finance, without requiring the court to intervene, except in the case <strong>of</strong> dispute. An insolvency<br />
law can specify the decisions that will require court approval, such as the provision <strong>of</strong> a priority<br />
ranking above the rights <strong>of</strong> existing secured creditors to secure post-commencement finance.<br />
The court’s capacity to handle the sometimes complex commercial issues involved in<br />
insolvency cases is <strong>of</strong>ten not only a question <strong>of</strong> knowledge and experience <strong>of</strong> specific<br />
law and business practices, but also a question <strong>of</strong> that knowledge and experience being<br />
current and regularly updated. To address the issue <strong>of</strong> judicial capacity, a special focus<br />
on the education and ongoing training <strong>of</strong> court personnel, not only <strong>of</strong> judges but also <strong>of</strong><br />
clerks and other court administrators, will assist in supporting an insolvency regime that<br />
has the ability to respond effectively and efficiently to its insolvency caseload. 9<br />
The <strong>Insolvency</strong> Law adheres to the UNCITRAL (2005) recommendation to separate<br />
jurisdictional matters from administrative matters in an insolvency proceeding. The<br />
insolvency courts direct the proceedings and resolve all matters where passing a judgment<br />
or application <strong>of</strong> public force is required [LCM 7], while administrative matters within the<br />
proceedings are entrusted to insolvency experts authorized and appointed by the Federal<br />
Institute <strong>of</strong> Specialists in Commercial <strong>Insolvency</strong>, or Ifecom. A 2006 court precedent provides<br />
a clear perspective on this interplay between the courts and Ifecom:<br />
9<br />
INSOLVENCIES. AUTHORITY OF THE JUDGE GOVERNING THE INSOLVENCY PROCEEDINGS.<br />
The LCM Bill recognizes the need for the insolvency judge to be assisted in non-legal<br />
disciplines inherent to these types <strong>of</strong> processes, such as commercial, accounting, financial<br />
or administrative disciplines, and precisely attending the need to educate the judge in special<br />
UNCITRAL (2005), pp. 33-34.<br />
<strong>White</strong> & <strong>Case</strong><br />
17
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