Comercial Mexicana Shareholders OK Restructuring
Mexican retailer Comercial Mexicana said on Monday that its shareholders have approved a plan to restructure its debt, moving a step closer to the end of a lengthy battle with creditors, Reuters reported. The company, known by analysts as Comerci, is Mexico's No. 3 supermarket operator and defaulted on its obligations after its derivatives bets on the peso soured at the height of the financial crisis in late 2008. Last month, the company, which is controlled by insiders, reached a deal with creditors to pay back around $1.5 billion over seven years. Creditors had originally demanded more than $2 billion. The shareholders' vote was crucial for Comerci to move ahead with a prepackaged credit court proceeding in a landmark test of Mexico's insolvency laws. Its plan will be presented in the United States as well, under Chapter 15 of the U.S. bankruptcy code. Comerci could become the first listed company to file a pre-pack debt restructuring in Mexico, taking advantage of 2007 reforms to the country's insolvency law and opening the way for other troubled companies. Mexico's insolvency law, called "Concurso Mercantil," is just 10 years old. Companies and lenders are still wary of using it given concerns about transparency and a lack of precedent for many complex situations, and they often opt instead to spend years in out-of-court negotiations. Read more.