In Mexico, the trustee holds the property of the trust as the legal owner, but only legally authorized entities may act as trustees, for example, banks (credit institutions) and other financial institutions. Deed in trust is one of the first choices of lenders when it comes to secured transactions, even in bankruptcies, but that may no longer be the case.
During the third trimester of 2021, 4 petitions in bankruptcy were filed, notified, and registered on the Federal Insolvency Institute's records.[1]
Altan Redes, S. A.P.I. de C. V. (Altan).
Altan, a telecommunications company, filed a voluntary petition in bankruptcy in the reorganization stage on July 14, 2021, before a District Court in Mexico City.
Demar Instaladora y Constructora, S. A. de C. V. (Demar).
This is the case of an entity incorporated outside of Mexico which filed for bankruptcy before a Mexican court. The petition was dismissed because the debtor’s bylaws contained a stipulation that required the authorization of an Independent Director to file for bankruptcy. The debtor then challenged the dismissal before a High Federal Court in Mexico City.
During the second trimester of 2021, 9 petitions in bankruptcy were filed, notified, and registered on the Federal Insolvency Institute's records.
ABC Aerolíneas, S. A. de C. V. (Interjet).
Although Interjet announced its plan to file a voluntary petition in bankruptcy, a creditor filed an involuntary petition against the airline before a District Court in Mexico City. The involuntary petition was admitted on Abril 24, 2021 and Interjet appeared voluntarily to be served to process on June 21, 2021.
Creditors can set aside fraudulent conveyances of their debtors by a revocatory action, also known as actio pauliana. This action is not the same if the debtor is bankrupt. There is the non-bankruptcy actio pauliana and the bankruptcy actio pauliana. Civil codes govern the former and the Bankruptcy Law covers the latter. Creditors under the non-bankruptcy actio pauliana have fewer rights and benefits than those under the bankruptcy actio pauliana.
Imprisonment for civil or commercial debts is prohibited in Mexico. The creditor’s only chance for recovery is upon the debtor’s assets.
Foreign judgments may be utilized in Mexico either: 1) as evidence, 2) as a binding resolution, or 3) as a resolution to be enforced. In the first case, the foreign resolution is utilized as evidence of facts but not of law, in the second as evidence of law (res judicata), and in the third as a resolution to be enforced.
In a guaranty, the guarantor assumes an obligation in favor of a creditor to pay in the place of the principal in the event of default (conditional, secondary obligation). A guaranty is a separate contract from the contract by which the principal assumed the obligation in favor of the creditor, though dependent and accessorial to it.
Outside a bankruptcy event, the guarantor has the same defenses as the principal against the creditor. In case of payment to the creditor, the guarantor has the right to repeat against the principal.
Bankruptcies are concourses, that is, proceedings where multiple creditors concur in relation to one common debtor. All creditors must submit their proof of claims before the bankruptcy court. The bankruptcy court will adjudge, upon the evidence submitted, who are the debtor’s creditors and, consequently, which are the allowed claims. The claims allowance proceeding is multiparty litigation. In effect, in the claims allowance proceeding, the creditor’s counterparty is not only the debtor but also the rest of the creditors.
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)?