Mexican Legal Framework of Business Insolvency - White & Case

the reorganization plan); (3) all signing secured and priority creditors; and (4) all
secured and priority creditors whose claims are stated to be paid in full, subject
to certain legal rules concerning quantification [LCM 165].
The fact that the reorganization plan can be imposed on non-signing parties is
arguably the single most important aspect in favor of restructuring a debtor’s debts
through court-assisted reorganization procedures. Should the reorganization plan be
binding only on signing parties, it would have been sufficient to do so out of court,
without having to incur the delays and expenses of a judicial procedure. Of course,
the benefits of a debtor declared en concurso, consisting of the stay of execution,
suspension of payments, rejection of cumbersome contracts, etc., would not be
afforded out of court during the restructuring negotiations.
s. Expedited Proceedings
One of the novelties of the 2007 amendments to the Insolvency Law was the
introduction of expedited proceedings.
Reaching agreement through voluntary restructuring negotiations is often impeded by the
ability of individual creditors to take enforcement action and by the need for unanimous creditor
consent to alter the repayment terms of certain existing classes of debt. These problems are
magnified in the context of complex, multinational businesses, where it is especially difficult
to obtain consent from all relevant parties....Voluntary restructuring negotiations can also be
impeded by a minority of affected creditors who may refuse to agree to a solution that is in the
best interests of most creditors in order to take advantage of their position to extract better
terms for themselves at the expense of other parties (often referred to as “holding out”). Where
these hold-outs occur, the voluntary agreement can only be implemented if the contractual
rights of these dissenting creditors can be modified without their consent. Under most
existing legal systems, such a modification of contractual rights requires the commencement
of full reorganization proceedings under the insolvency law, involving all creditors and
requiring satisfaction of the provisions of the insolvency law governing the conduct of such
proceedings….These difficulties, as well as some of the costs, delays and procedural and legal
requirements often associated with full reorganization proceedings, can be avoided where
White & Case
73