The insolvency systems for companies and other legal entities vary from country to country. The main purpose of insolvency legislation, however, is fundamentally the same worldwide. If there is important value in the business, we need to protect it in order for the company to continue as a viable business and pay creditors. If the liquidation value is higher than the operational value, jurisdictions have liquidation mechanisms that allow companies to efficiently exit the market and pay creditors through an ordered sale of assets.
In Mexico, all a debtor’s assets are subject to account for the performance of its obligations, except for those assets which, pursuant to law, are inalienable or cannot be attached.1 When a debtor is unable to pay its debts as they become due, it falls into insolvency which is an economic phenomenon with financial, social and legal consequences. When a debtor is unable to pay its debts as they become due, the Mexican legal system provides a mechanism to address the collective satisfaction of the claims with the assets of the debtor.
Juan Carlos Machorro, Carlos Olvera and Ricardo Orea, Santamarina y Steta
This is an extract from the 2021 edition of GRR's The Americas Restructuring Review. The whole publication is available here.
In summary
Eugenio Sepúlveda, Galicia Abogados
This is an extract from the third edition of The Guide to Corporate Crisis Management published by Latin Lawyer. The whole publication is available here.
Diego Sierra, Von Wobeser y Sierra SC
This is an extract from the 2020 edition of the Americas Restructuring Review, published by Global Restructuring Review. The whole publication is available here.
In summary
1. Introduction
On 23 June 2017, a reform to the Federal Criminal Code was enacted to classify the criminal offense of “illegal extrajudicial debt collection” established in article 284 Bis.
El pasado 15 de diciembre de 2017 se publicó en el DOF la Sexta Resolución de Modificaciones a la Resolución Miscelánea Fiscal para 2017 y sus anexos 1, 1-A y 23. De su contenido, destacan los siguientes temas:
According to article 16 of the Mexican Commercial Insolvency Law (in Spanish “Ley de Concursos Mercantiles”), a foreign company can be declared under insolvency in Mexico, but only regarding the branches and goods located in Mexican territory.
Yet, if a cross border insolvency proceeding has been initiated abroad, the Mexican Courts may dictate several remedies (provisionally) and also to execute the orders issued within a foreign insolvency proceeding, regarding the company’s goods and properties located in México, in order to protect the estate and creditor’s rights.
An amendment to various Articles of the General Business Corporation Law was published in the Federal Official Gazette on January 24, 2018, which contemplates the following changes: