Mexican Legal Framework of Business Insolvency - White & Case
Mexican Legal Framework of Business Insolvency - White & Case Mexican Legal Framework of Business Insolvency - White & Case
28 c. Excluded Merchants Merchants that are exempt from the application of the Insolvency Law include: (1) “small merchants”; (2) state-owned entities; and (3) insurance and bonding intermediaries. i. Small Merchants “Small merchants” shall not be declared en concurso unless they voluntarily accept in writing the application of the Insolvency Law [LCM 5, T9]. This raises two issues: (1) the issue of who qualifies as a small merchant; and (2) the issue of its voluntary written acceptance to the application of the Insolvency Law. 1. Definition of Small Merchant The Insolvency Law provides the definition of small merchant as (1) those whose total outstanding debts do not exceed 400,000 UDIs [LCM 5] and (2) during the first five years following the enactment of the Insolvency Law (i.e., until May 13, 2005), those whose total outstanding debts (computed as the sum total of the par value at the time they were originally contracted) as of the entry into force of the Insolvency Law (i.e., May 13, 2000) did not exceed 500,000 UDIs [LCM T9]. The concept of small merchant was not present in the LCM Bill, but was added by legislators during the course of the legislative process, arguing that the costs associated with the application of the Insolvency Law made it inefficient for small merchants. 16 There is a logical flaw in the concept, since the recognized amount of debt of a debtor will only be known once the debtor has been declared en concurso and the process for recognition of claims (cfr. 16.b) has concluded. Several consequences of having been declared en concurso would have to be unwound by that time. Cfr. 16 Dictamination from the Senate’s Joint Finance and Public Credit, Commerce, Justice, and Legislative Studies Commissions.
2. Voluntary Acceptance Small merchants shall not be declared en concurso unless they voluntarily accept in writing the application of the Insolvency Law. The scope of a small merchant’s voluntary written acceptance is still unclear. Would a voluntary concurso petition qualify as such? Would a private communication to a single creditor? If so, would someone not privy to that communication be entitled to demand the declaration of concurso? Is the acceptance revocable? If so, does it become irrevocable at some point? Unfortunately, the author knows of no precedent addressing any of these issues. ii. State-Owned Entities State-owned entities that are not formed as commercial companies shall not be declared en concurso under the Insolvency Law [LCM T4]. While rules governing state-owned enterprises vary from state to state, most are consistent with the federal regime. The federal regime includes three types of state-owned entities: (1) decentralized organisms; (2) state-controlled companies; and (3) public trusts [LOAPF 1]. Of these three, only state-controlled companies are formed as commercial companies and therefore can be declared en concurso. It is unclear whether the estate of a public trust engaged in an entrepreneurial pursuit (cfr. 10.b.iv) could be declared en concurso. iii. Insurance and Bonding Intermediaries Insurance companies, insurance mutualists, reinsurance companies, bonding companies and re-bonding companies shall not be declared en concurso under the Insolvency Law [LCM T4]. White & Case 29
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- 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 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: The above court precedent has two f
- 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
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- 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
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- 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
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2. Voluntary Acceptance<br />
Small merchants shall not be declared en concurso unless they voluntarily accept<br />
in writing the application <strong>of</strong> the <strong>Insolvency</strong> Law. The scope <strong>of</strong> a small merchant’s<br />
voluntary written acceptance is still unclear. Would a voluntary concurso petition<br />
qualify as such? Would a private communication to a single creditor? If so, would<br />
someone not privy to that communication be entitled to demand the declaration<br />
<strong>of</strong> concurso? Is the acceptance revocable? If so, does it become irrevocable at<br />
some point?<br />
Unfortunately, the author knows <strong>of</strong> no precedent addressing any <strong>of</strong> these issues.<br />
ii. State-Owned Entities<br />
State-owned entities that are not formed as commercial companies shall not be<br />
declared en concurso under the <strong>Insolvency</strong> Law [LCM T4]. While rules governing<br />
state-owned enterprises vary from state to state, most are consistent with the<br />
federal regime. The federal regime includes three types <strong>of</strong> state-owned entities:<br />
(1) decentralized organisms; (2) state-controlled companies; and (3) public trusts<br />
[LOAPF 1]. Of these three, only state-controlled companies are formed as commercial<br />
companies and therefore can be declared en concurso. It is unclear whether the<br />
estate <strong>of</strong> a public trust engaged in an entrepreneurial pursuit<br />
(cfr. 10.b.iv) could be declared en concurso.<br />
iii. Insurance and Bonding Intermediaries<br />
Insurance companies, insurance mutualists, reinsurance companies, bonding<br />
companies and re-bonding companies shall not be declared en concurso under<br />
the <strong>Insolvency</strong> Law [LCM T4].<br />
<strong>White</strong> & <strong>Case</strong><br />
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