Mexican Legal Framework of Business Insolvency - White & Case

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Some clarifications are in order:
■■ Claims described in Items 1, 2, 3 and 4 are referred to in the Insolvency Law as claims
against the estate [LCM 224].
■■ Claims described in Items 5 and 6 are referred to in the Insolvency Law as singularly
privileged claims [LCM 218].
■ ■ Secured claims referred to in Item 7 are those that are secured by a mortgage or
a pledge. These claims are paid out of the proceeds of the property that have been
collateralized against the mortgage or pledge, and generally in the order that the
pledges or mortgages have been registered in accordance with applicable law
[LCM 219].
■ ■ Priority claims referred to in Item 9 are those from creditors with a privilege or a
retention right (e.g., a mechanics lien). These claims are paid out of the proceeds of
the retained property and are generally paid in the order of privilege that has been
registered in accordance with applicable law or by the date of the claims [LCM 220].
■ ■ Unsecured claims referred to in Item 10 are all others not otherwise specified. These
claims collect proceeds of the estate on a pro rata basis [LCM 222].
d. Asset Liquidation
Value maximization and the preservation of a going concern are the overriding principles
underlying asset liquidation [LCM 197].
Upon the quiebra declaration, the receiver will sell off the assets of the estate, and
shall attempt to receive the highest return on the sale. If the sale of productive units
allows for receiving the highest proceeds from the sale, the receiver must consider the
advisability of keeping the enterprise as a going concern [LCM 197].
In principle, the sale must be carried out through public auction [LCM 198]. The receiver
may employ different means of sale in the case of perishable goods [LCM 208] or, prior
judicial authorization, if such alternative means of sale would yield a higher value for the
asset in question [LCM 205].