Mexican Legal Framework of Business Insolvency - White & Case

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18 areas as to why an entity (the Federal Institute of Specialists in Commercial Insolvency) was implemented with the purpose of the latter to authorize those persons who meet the requirements to serve as visitor, conciliator or receiver. However, the same LCM Bill clearly states the idea, materialized in Article 7 of the LCM, that in the insolvency proceedings, the judge is the central and governing body of the process, since the process requires intervention of the judicial authority to comply with the formalities of due process. Therefore, such institute is only an auxiliary and essentially administrative body that must be maintained at the margin of a direct intervention in insolvency proceedings, as envisioned by the lawmaker. a. The Judge Only federal courts sitting in the domicile of the debtor have jurisdiction over insolvency proceedings [LCM 17]. This jurisdiction rule raises two issues: one, on the exclusive jurisdiction of federal courts; and another, on the domicile of the debtor. i. Exclusive Jurisdiction of Federal Courts While the Federal Congress has the exclusive authority to pass commercial laws [CPM 73-X], for historic reasons federal and local courts have concurrent jurisdiction on commercial disputes [CPM 104-I]. This situation has prompted discussion regarding the constitutionality of the statutory exclusivity of federal courts in insolvency matters. Ovalle (2000) presents a clear explanation of the merits of this discussion: To determine whether federal jurisdiction provided in Article 17 of the Insolvency Law violates [the constitutional principle of] concurrent jurisdiction, the type of interest affected by the insolvency process is the starting point. If one determines that only individual interests are the subject matter of such processes, the conclusion would be that there is in fact a violation to the alternative jurisdiction provided in Article 104, Section I, of the Federal Constitution. On the other hand, if one determines that not only individual interests are the subject matter of this type of process, but rather that general, public or social interests are the subject matter thereof, then the conclusion should be that Article 17 of the Insolvency Law does not violate the provisions of Article 104, Section I, of the Federal Constitution.
The issue is still divided between treatises. 10 Unfortunately, there are no binding court precedents on the issue. ii. The Domicile of the Debtor The determination of the domicile of the debtor depends on whether the debtor is an individual or an entity. In the case of an individual debtor, his domicile is the principal place of business of his enterprise and, in the absence of such place, the place “where he has his domicile” [LCM 4-III]. The rules that govern the domicile of the individual debtor in the absence of the principal place of business of his enterprise are, in the following order: (1) the place where he habitually resides, (2) where he actually lives and, if none, (3) wherever he is found. There is also a conclusive presumption of domicile for cases of minors, incapacitated persons, active members of the armed forces, public servants, members of the diplomatic corps, representatives of other countries or of international organizations and prisoners [CCF 29-31]. In the case of an entity debtor, its domicile shall be its corporate domicile and, if such corporate domicile is unrealistic, the principal place of its management [LCM 4-III]. This concept is akin to determining a debtor’s center of main interests found in Article 16.3 of the Model Law (which is adopted by Article 295 of the Insolvency Law). The concept of the unrealistic corporate domicile has its origins in the LQSP, the Bill of which provides: In the case of the insolvency of an entity, a complex issue has arisen that deserves a legislative solution: It is the issue concerning the legally determined corporate domicile or the effective domicile, where as a result of subsequent changes or initial discrepancy, there is no correlation between the effective or administrative domicile and the legal domicile provided in the articles of incorporation. 10 In favor of the constitutionality: López (2001), Méjan (2001), Ovalle (2000). Against it: Quintana (2003), Acosta (2001). White & Case 19
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 and 24: . Prevention of Systemic Risk Anoth
Page 25: verification and admission of claim
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
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. The Reorganization Plan The purpo
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extend to guarantors or co-obligors
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the reorganization plan); (3) all s
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If a debtor does not successfully c
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ii. Timing Removal takes effect leg
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Claims by creditors operate at two
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■■ ■■ ■■ ■■ ■■
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predictability in commercial relati
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The receiver may oppose the foreclo
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■■ A foreign proceeding is a co
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Conditioning the application of cro
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f. Enabling and Access The rules of
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30, 31, 32, 33, 34, 35, 36, 37, 38,
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ii. Once Recognition Is Granted Onc
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concerning the coordination of proc
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20. Non-bank Financial Sector Firms
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■■ ■■ If, however, somethin
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Capitalization is an important indi
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A bank would be declared en concurs
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Bank restructuring through support
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30. Purchase-and-Assumption A bank
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causes for dissolution has occurred
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[LCM 75]. The determination as to w
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33. Securities Market 84 Holders of
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A reorganization plan would be enfo
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■■ ■■ All kinds of animals
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Galindo (1957). GALINDO GARFIAS, Ig
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Mexican Legal Framework of Business Insolvency - White & Case

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