The not-so-automatic stay, the Minera del Norte case.

Bankruptcy adjudication is not automatic, and even in voluntary petitions, a prebankruptcy procedure needs to be initiated before the bankruptcy adjudication. In the prebankruptcy, the parties will submit evidence to prove whether the debtor is in general default. It is not sufficient that the debtor merely confesses a general default to the court.

There have been cases in Mexico where the debtor must walk through a long path to get the petition's admission, even in voluntary petitions.

This is the case of Minera del Norte, S.A. de C.V., a Mexican mining company, which filed a petition in bankruptcy on May 11, 2020, dismissed three days later on the grounds that the financial statements were not signed.

The debtor filed a motion for reconsideration before the bankruptcy court, and the dismissal was affirmed on May 28, 2020. The debtor, then, on June 22, 2020, filed an amparo lawsuit (an extraordinary judicial recourse) before a Federal High Court, which on February 12, 2021, remanded the process with instructions to the bankruptcy court. To this day (April 7, 2021), the bankruptcy court has not issued a new resolution following the Federal High Court's instructions. That is, more than eleven months have passed, and a voluntary petition in bankruptcy has not even been admitted. Couldn't the bankruptcy court just ask for the signed financial statements and not dismiss the petition? (see Why Bankruptcies fail in Mexico).[i]

For further information about bankruptcy law in Mexico, my work "Bankruptcy Law in Mexico", written in English, 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.

 

 

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