Mexican Legal Framework of Business Insolvency - White & Case

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q. Post-Commencement Financing
The Insolvency Law provides a very poor framework for post-commencement
financing. The debtor is entitled to obtain secured or unsecured post-commencement
financing with the approval of the conciliator [LCM 75]. When the debtor obtains
post-commencement financing for the management and operation of the estate, such
financing will be considered a claim against the estate (cfr. 16.c) [LCM 224-II, III].
Post-commencement financing does not necessarily have to be obtained in the ordinary
course of business, but will require conciliator approval if outside the ordinary course
of business. Weil (2000) 46 provides an excellent illustration of the ordinary course of
business issue in the context of post-commencement financing:
[T]he determination as to what constitutes a transaction in the ordinary course of
the debtor’s business is fact-specific and must be made on a case-by-case basis.
For example, trade credit obtained by a debtor in possession in connection with the dayto-day
operation of its business generally constitutes an ordinary course of business
transaction. Monies advanced by the lender to fund the debtor’s payroll and operating
expenses typically are not regarded as credit obtained in the ordinary course of business.
While en concurso, the debtor is protected from the suspension of payments of only
its pre-petition debts, so the payment of post-petition debts is not suspended (cfr.
15.g). This means that the debtor would not be found in contempt of court if it makes
payments and repayments of post-petition debt. However, the stay of execution
imposed by the concurso declaration applies broadly during the conciliation (cfr.
15.h), so a creditor will still encounter hurdles to collect a post-petition credit during
conciliation in the absence of the debtor’s cooperation.
ALI Nafta (2003) argues that the legal and regulatory regime applicable to Mexican
commercial banks makes post-commencement financing “extremely rare” in Mexico. 47
46 P. 200.
47
See Reporters’ Note 8, pp. 106-108.