Corona & Nepote

               The State may participate in the equity of a legal entity. If that legal entity was incorporated under mercantile laws, then it falls within the concept of merchant debtor. Hence, state-owned companies may be subject to bankruptcy proceedings. The problem arises in majority state-owned companies.             Majority state-owned companies are part of the Federal Executive Branch in the parastatal division, that is, part of the government. Then, if “the government is always solvent”, how can a majority state-owned company be subject to a bankruptcy proceeding, which is triggered by a general default?             Before the amendment of 2019, a provision permitted a state-owned company to be adjudicated in bankruptcy, but there was a debate raged on whether majority state-owned companies could be too. The 2019 amendment ex...

  Foreign creditors have the same rights and opportunities as the national creditors before a bankruptcy proceeding in Mexico, although there are some exceptions. Creditors are a key factor in bankruptcy. The following is an initial and broad distinction of creditors.           a. Generic creditors. During the pre-bankruptcy proceeding, generic creditors do not participate; only the debtor and the visitor take part in voluntary petitions; and the debtor, the visitor, and the plaintiff (whether a single or group of creditors or the Fiscal Attorney) participate in involuntary petitions. After the bankruptcy adjudication but before the ruling on the allowance of claims, those acting as creditors may participate in the bankruptcy as generic creditors. The generic creditors have the following rights and powers: 1. They have access to the judicial record, the annexes that the debtor submitted with the voluntary petition, the visitor’s ...

  On March 22nd, the CEO of Interjet (ABC aerolíneas, S.A. de C.V.) announced the imminent filing before a Mexican court of a petition in bankruptcy in the reorganization stage. Interjet is one of the top 5 airlines in Mexico. The bankruptcy of an airline is the same as any other bankruptcy except for the following. The debtor that, under a concession title, provides a federal, state, or municipal public service, may be adjudicated in bankruptcy. [1] Airlines fall within the said provision, because air transportation is a federal public service in Mexico. In these special proceedings, the governmental agency that granted the concession constitutes another party in the proceeding. The granting agency in air transportation services is the Agency of Transport and Communication (Secretaría de Comunicaciones y Transportes) , currently headed by Mr. Jorge Arganis Díaz-Leal. As a party in the special proceeding, the granting agency appoints the insolvency officers, [2] decides w...

  WHY BANKRUPTCIES FAIL IN MEXICO             This article aims to explain why bankruptcy has not been the first choice for businesses in Mexico.   For many businesspeople, bankruptcies are a failure in Mexico; if they were not, there would be more bankruptcy proceedings. According to the Federal Insolvency Institute, under the current law, from 2000 to 2020, there have been 805 bankruptcies, indicating about 40 bankruptcies per year in a country of 125 million inhabitants [1] and approximately 5 million businesses, 99.8% of which are mini-, small-, and medium-size, while the others are big businesses (about 10,000). [2] During the Covid-19 pandemic, in 2020, around 1 million mini-, small-, and medium-size businesses closed definitively, yet only 40 bankruptcies were filed in Mexico throughout that year. The companies most damaged by this pandemic were airlines and cinemas. Two of the largest companies in Mexico, co...

The cart before the horses, the difficult to avoid conversion to the liquidation stage. Bankruptcy in Mexico has two successive stages: reorganization and liquidation. When reorganization is not possible, bankruptcy is converted to the liquidation stage. The purpose of the reorganization stage is to maintain the enterprise and pay the allowed creditors through a reorganization plan. The purpose of the liquidation stage is to sell the enterprise – as a going concern or in segments – and pay the allowed creditors. If a plan is not submitted and approved within one hundred and eighty-five calendar days following the publication in the Federal Official Gazette of the summary of the adjudication in bankruptcy, the reorganization stage is converted to the liquidation stage. The court can extend this period by ninety calendar days if the reorganization officer or a certain percentage of the allowed creditors request it. The court may grant a second extension if the debtor and a certain pe...