Developments Under Mexico’s Ley de Concursos Mercantiles del 2000

According to the Instituto Federal de Especialistas de Concursos Mercantiles's (“IFECOM”) Fifth Bi-annual Report presented on Dec. 3, 2002, only 63 cases have been filed in Mexico under the Ley de Concursos Mercantiles. These 63 cases involve 90 debtors: four individuals and 86 entities, approximately 55,500 creditors and NP$31,500 million in claims. Mexico’s federal district judges have granted 75 percent of the bankruptcy petitions filed thus far, but only 13 cases have been concluded; 43 percent of those 13 cases were commenced as a result of voluntary petitions for bankruptcy relief and 57 percent entailed involuntary petitions. The industries represented in the 63 cases filed include: manufacturing (33 percent; 29 cases), construction (25 percent; 22 cases), mining (10 percent; 9 cases), and financial enterprises (9 percent; 8 cases), with commercial, service companies and the like representing the remaining 23 percent (22 cases) of the cases filed. Further, the average number of days transpiring between the date the bankruptcy petition was filed with the federal district court and the date in which the court entered the order authorizing the actual commencement of the case was 165 calendar days. Josefina Fernandez McEvoy, co-chairman, cautions that it takes an average of five months after a voluntary or an involuntary bankruptcy petition is filed in Mexico for a debtor to be declared a bankrupt under the LCM. This delay raises serious concerns for, at least, U.S. creditors, to the extent that the presentment of a bankruptcy petition does not trigger an automatic stay that would prevent the dismemberment of the bankruptcy estate by aggressive creditors.

The Honorable Federal District Judge Alejandro Villagomez Gordillo is the first to grant a petition by a U.S. Foreign Representative for the recognition of a pending main foreign bankruptcy proceeding (4th District, Civil Division, Case No. 29/2001), pursuant to Title XII of the LCM. The main foreign proceeding, In re Jacobo Xacur, Felipe Xacur and Jose Maria Xacur (JA under case no. 96-485380H5-7), has been pending in the Houston Division of the Southern District of Texas since Aug. 22, 1997. This landmark decision should contribute to a more desirable cross-border business environment between the United States and Mexico.