Chapter 22 in Mexico.

How many times can a debtor file a petition in bankruptcy in the reorganization stage (Chapter 11)? What is the time between the approval of the plan and the second petition (Chapter 22)?

In Mexico, once the plan's approval concludes the case, the debtor can file a new petition in bankruptcy in the reorganization stage at any time. The default of a previously approved reorganization plan (Chapter 11) does not produce the immediate opening of the liquidation stage or disapproval of the reorganization plan submitted in the new case (Chapter 22). The breach of a previously approved reorganization plan is both an act of bankruptcy[1] and a fact to consider for the reorganization officer when determining whether to request the early termination of the reorganization stage.[2]

Famous cases of Chapter 22 in Mexico are:

·       Grupo Iusacell, S.A. de C.V. (wireless company)

o   The first case was tried by the 7th District Court of Mexico City (case number 107/2006) and closed by approval of the reorganization plan on March 30, 2007.

o   The second case was tried by the 9th District Court of Mexico City (case number 718/2010, prepackage) and closed by approval of the reorganization plan on April 6, 2011.

·       Bio Pappel, S.A.B. de C.V. (paper company)

o   The first case was tried by the 1st District Court of Durango (case number 3/2004) and closed by approval of the reorganization plan on February 7, 2005.

o   The second case was tried by the 1st District Court of Durango (case number 16/2008) and closed by approval of the reorganization plan on July 22, 2009.

 

For further information about bankruptcy law in Mexico, my work "Bankruptcy Law in Mexico", can be accessed at https://works.bepress.com/francisco-rodrigueznepote/4/, where it can be downloaded freely. A complete translation of the legal text can be found there, as well.


[1] Article 11.- A general default is presumed in any of the following cases:

VI. Breach of financial obligations in a previous reorganization plan approved in terms of Title Fifth,

[2] Article 150.- The Merchant will have to collaborate with the reorganization officer and provide him with the information he considers necessary for performing his functions.

The reorganization officer may request the judge the early termination of the reorganization stage when he considers the lack of willingness of the Merchant or his creditors to sign a reorganization plan or the impossibility of doing so. The reorganization officer would consider if the Merchant breached a previously approved reorganization plan. The request of the reorganization officer will be conducted in an ancillary proceeding.

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