Mexico is studying international best practices for corporate bankruptcy proceedings after glassmaker Vitro SAB’s use of intercompany debt caused some investors to question the country’s laws, Bloomberg Businessweek reported. Vitro, which won a Mexican court’s approval this month for its debt restructuring plan, has called attention to a loophole in the country’s bankruptcy process that allowed it to use loans made to itself to qualify as its own biggest creditor.
Chapter 15 Headlines
Oilsands Quest Inc., which explores for oil in sand deposits in western Canada, is seeking protection from its U.S. creditors and shareholders, Dow Jones Daily Bankruptcy Review reported. Oilsands, which once did business as CanWest Petroleum Corp., sought the protection of a Canadian court last November. The Calgary, Alberta, company is now asking the U.S. Bankruptcy Court in Manhattan to recognize the Canadian proceeding and extend its protection to the company in the U.S., where it faces three shareholder lawsuits.
Mexican glass maker Vitro SAB said Tuesday that a court in Mexico has approved its debt restructuring, but that it expects certain of its bondholders who have fought the deal to continue efforts against the plan, Dow Jones reported. In a press release, Vitro said a judge in Monterrey approved the proposed restructuring put forward by the conciliator in the case. The restructuring of $1.5 billion in third-party debt has caused controversy among bondholders, as it involves Vitro voting on an additional $1.9 billion in intercompany debt to secure the majority needed for approval.
Canadian foamer Domfoam International Inc. has filed for bankruptcy protection in the US after flagging sales and a million-dollar fine over price-fixing led the company into insolvency, PlasticsNews.com reported. Domfoam filed for Chapter 15 protection in the U.S. Bankruptcy Court in Toledo, where it faced more than a dozen lawsuits over the inflated prices it charged for its foam that goes into carpet underlay, furniture and bedding, according to a report from Dow Jones.
Struggling Catalyst Paper Corp. has received the go-ahead from a court in British Columbia to begin a planned restructuring, while at the same time filing for protection from creditors in the United States, The Globe and Mail reported. The Richmond, B.C.,-based company said Wednesday a B.C. court had issued an initial order under the Canada Business Corporations Act to begin the restructuring process. The plan would see bondholders take control of the firm. It would also reduce its overall debt by $315.4-million and cut annual cash interest payments by $25.5-million.
Two Congressmen from opposite sides of the aisle are calling on the Mexican government to take action in Vitro S.A.B.'s restructuring, which they say could set a "dangerous precedent" that will hurt investors in the Mexican glass company and future cross-border investment, Dow Jones Daily Bankruptcy Review reported. Rep. Jared Polis (D., Colo.) and Rep. Patrick Meehan (R., Pa.) sent a letter last week to the Mexican Embassy in Washington, D.C., warning about the danger of allowing Vitro's pending restructuring to proceed.
Vitro S.A.B.'s bondholders are pushing to move forward with a legal battle that could cost $1.35 billion or more, calling the Mexican glassmaker's bid to stop them a meritless "act of pure gamesmanship," Dow Jones Daily Bankruptcy Review reported. An informal group of bondholders and bond trustee Wilmington Trust separately asked the U.S. Bankruptcy Court in Dallas Thursday to deny Vitro's request to enforce the shield of bankruptcy currently protecting the company from litigation, according to court papers.
India mining giant Ashapura Minechem Ltd. filed for Chapter 15 bankruptcy protection Tuesday in U.S. Bankruptcy Court in Manhattan in a move to block foreign shipping companies that won a $125 million legal judgment against it from raiding the company's U.S. bank accounts, Dow Jones Daily Bankruptcy Review reported. The Mumbai-based company, a mineral miner and processor with debts topping $223.4 million, argued that the seizure of its U.S.-based assets would jeopardize the financial overhaul underway in its home country.
Vitro SAB won U.S. recognition of its ongoing Mexican restructuring proceeding, a decision that shields U.S. assets from debt collection attempts by angry creditors, Dow Jones Daily Bankruptcy Review reported. Judge Harlin D. Hale of the U.S. Bankruptcy Court in Dallas signed off on the Mexican glass maker's Chapter 15 petition Thursday. Read more. (Subscription required.)
Tokio Marine Europe Insurance Ltd, a part of the Tokio Marine Group, said it filed a petition for protection from creditors under Chapter 15 in U.S. bankruptcy court in Manhattan, London South East reported on a Reuters story. The company, which underwrites commercial property, casualty and marine insurance, in a court filing on Monday listed assets of more than $100 million and liabilities of more than $100 million.