In a case with deep implications for U.S.-Mexico trade relations, a U. S. Bankruptcy Court in Dallas has put 10 subsidiaries of Mexican-based glassmaker Vitro SAB into involuntary bankruptcy. Texas-based Bankruptcy Judge Harlin Hale also gave credence to allegations that the subsidiaries schemed to block U.S. collectors from collecting debts. This all comes less than two weeks after an appeals court upheld a summer decision by Hale not to recognize the terms of Vitro's bankrutpcy plan filed in Mexico.
Several months ago, Hale denied enforcement of Vitro’s Chapter 15 reorganization plan approved in a Leon (Mexico) court because he believed Vitro's plan “manifestly contrives” U.S. bankruptcy policy and the interests of American bondholders and trade creditors. Typically, a judge would affirm such plans out of respect to judges in friendly nations and for trade relations. In late November, the U.S. Court of Appeals in New Orleans denied Vitro's appeal of Hale's initial decision. In the aftermath, Vitro threatened that it was considering legal action as a result.
For its part, Vitro responded to the judge's latest decisions and claims of improper actions by subsidiaries by noting it will proceed with its restructuring in Mexico and that its most important assets are minimally impacted, if at all, by Hale's latest ruling.
-Brian Shappell, CBA, NACM staff writer