A Chapter 15 (the cross-border provision allowing U.S. courts to recognize or ignore foreign insolvency proceedings that include domestic trade creditors) case out of the U.S. Bankruptcy Court in Dallas saw Judge Harlin Hale deny enforcement of a restructuring plan from the Mexican-based company Vitro SAB. Vitro, a glassmaker, previously saw its reorganization plan approved in a Leon (Mexico) court that included waiving the guarantee claims of U.S.-based bondholders while Mexican creditors received 40 cents on the dollar and the debtor retained company control. Although, it is typical for a judge to affirm such plans out of respect even when U.S. creditors take a bit of a hit, Hale believed the decision “manifestly contrives” U.S. bankruptcy policy and the interests of American bondholders and trade creditors.
The case, which could have implications on U.S.-Mexican trade and business-law, presently is awaiting an appeal in the U.S. Bankruptcy Court’s Fifth Circuit.
-Brian Shappell, CBA, NACM staff writer
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