Mexico's retrogression: implications of a bankruptcy reorganization gone wrong

Porzecanski, Arturo C. (2011): Mexico's retrogression: implications of a bankruptcy reorganization gone wrong.

Abstract

Mexico is retrogressing, becoming an unpredictable and risky jurisdiction for the adjudication of legitimate claims involving domestic and international lenders and investors. This conclusion follows from an analysis of the precedent-setting corporate workout involving a major Mexican multinational (Vitro) now winding its way through the Mexican courts. It raises serious doubts about the capacity of that country’s insolvency regime to deliver an outcome viewed as fair and consistent with prevailing norms and practices in the United States and other reputable jurisdictions. The case may well have a chilling effect on the easy access to foreign financing that Mexican corporations have enjoyed during recent years. The Vitro case has the potential to complicate even U.S.-Mexico diplomatic relations.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mexico; bankruptcy; insolvency; workout; Vitro
• Subjects: F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems; K - Law and Economics > K2 - Regulation and Business Law > K22 - Business and Securities Law; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; G - Financial Economics > G3 - Corporate Finance and Governance > G33 - Bankruptcy ; Liquidation; N - Economic History > N2 - Financial Markets and Institutions > N26 - Latin America ; Caribbean

References

Arturo C. Porzecanski, "Corporate Workouts in Mexico: The Good, the Bad, and the Ugly," CSIS Issues in International Political Economy, April 2011.

Standard & Poor’s, "How Did Recovery Ratings on Mexican Corporate Issuers Perform through the Financial Crisis?" October 3, 2011.

Fitch Ratings, "Latin America High Yield," vol. II, November 2, 2010.

U.S. Bankruptcy Court, Northern District of Texas, "Memorandum of Opinion on Motion for Preliminary Injunction," Vitro S.A.B. Plaintiff, June 24, 2011.

Ad Hoc Group of Vitro Noteholders, "Ad Hoc Group of Vitro Noteholders Submitted Proposal and Does Not Support the Plan of Reorganization Filed by the Conciliador," Business Wire, November 4, 2011.

Vitro Press Release, "Vitro Announces Filing by Conciliador of Concurso Plan in Mexican Court," October 31, 2011.

Jacob Steinfeld, "Vitro S.A.: New Plan Structure Aimed to Pressure Non-Consenting Creditors," J.P. Morgan, November 1, 2011.

Supreme Court of the State of New York, County of New York, "Plaintiff's Memorandum of Law in Support of Its Motion for Partial Summary Judgment," Wilmington Trust N.A. Plaintiff, September 29, 2011.

Fitch Ratings, "Cemex S.A.B. de C. V. Full Rating Report," September 14, 2011.

Standard & Poor’s Press Release, "Cemex Downgraded to B- from B, Outlook Negative, Off Watch, on Concern for Performance in Depressed Key Markets," November 9, 2011.

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Heather Perlberg, "Vitro's 'Unorthodox' Debt Plan Spurs U.S. Lawmakers' Complaints," Bloomberg News, October 24, 2011.