Mexican Legal Framework of Business Insolvency - White & Case

epayment or abandonment shall apply with respect to each agreement, 38 and
the resulting balances are thereafter netted out. The resulting netted-out balance,
if in favor of the debtor, shall be payable to the debtor within 30 days or, if against
the debtor, shall constitute a claim against the debtor subject to concurso. This is
another case where the Insolvency Law allows for netting (cfr. 15.o).
d. Securities Loan Guaranteed With Peso-Denominated Securities
The situation in this case is clear in the absence of insolvency: Upon termination
of the securities loan agreement, the debtor and its counterparty have to
exchange securities of some kind and any over- or under-collateralization issues
become irrelevant in the absence of default.
However, the rule in the Insolvency Law is rather unclear. It would seem that
the Insolvency Law tried to provide that each party shall keep the securities
in their respective possession, these securities are marked-to-market and any
over- or under-collateralization issues are resolved by the rules applicable to the
repurchase netted-out balance: if in favor of the debtor, shall be payable to the
debtor within 30 days or, if against the debtor, shall constitute a claim against the
debtor subject to concurso.
7. Derivatives
Executory contracts for difference or futures contracts and derivative financial
transactions are grouped and treated in the same manner by the Insolvency Law.
While there are no legal definitions for contracts for difference or futures contracts,
these can be distinguished from ordinary purchase agreements with the special
characteristic that, when the term expires, instead of the seller transferring title
38 As in the case of repurchase agreements, the Insolvency Law is not clear in this respect. Please refer to the
comment in fn 37.
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