Vitro S.A.B. de C.V. has announced that on 21 July 2011 the United States Bankruptcy Court for the Northern District of Texas presiding over its Chapter 15 case entered an order granting recognition a…
Vitro S.A.B. de C.V. has announced that on 21 July 2011 the United States Bankruptcy Court for the Northern District of Texas presiding over its Chapter 15 case entered an order granting recognition as a foreign main proceeding to Vitro SAB“s voluntary reorganization concurso proceeding pending in Mexico. The Recognition Order extends the automatic stay under the US Bankruptcy Code to actions against Vitro SAB in any jurisdiction within the US by all its creditors, including holders of 2012, 2013 and 2017 notes issued by Vitro SAB. This ruling was made four days after the same judge had granted a preliminary injunction protecting Vitro Packaging Mexico, S.A. de C.V. According to the order, Section 1517(a) of the Bankruptcy Code provides that the court shall enter an order granting recognition if (1) the foreign proceeding for which recognition is sought is a foreign main proceeding or a foreign non main proceeding as defined in section 1502 of the Bankruptcy Code; (2) the foreign representative is a person or body; and (3) the petition meets the requirements of section 1515 of the Bankruptcy Code. The order also notes that the parties do not dispute that the Voluntary Mexican Proceeding is a foreign main proceeding; those in objection, however, argue that recognition should not be granted because the requirements of sections 1517(a)(2) and 1517(a)(3) have not been satisfied. The central issue before this Court presently is whether the debtor in the Mexican proceedings can name its own foreign representative,“ required for the application for recognition under 11 USC 1517. Vitro argued that under a proper construction of section 101(24), US bankruptcy courts should recognize a foreign debtor in possession (or its appointee) as a proper foreign representative, showing that in a concurso proceeding, unless the judge orders otherwise, a Mexican debtor retains the authority to manage its enterprise during the proceeding“s conciliation stage, similar to a debtor in possession. They were countered by arguments from objecting parties saying that: only the examiner, conciliator or the sindico appointed by the court in Mexico, may act as a foreign representative, and once an insolvency declaration has been entered, this task falls on the conciliator exclusively. This Court does not write on a clean slate on the issue. As demonstrated by Vitro in its briefing, in all of the other ancillary proceedings filed in U.S. Bankruptcy Courts in relation to Mexican concurso proceedings since the inception of Chapter 15, have found that recognition should be granted. Moreover, U.S. bankruptcy courts have granted recognition of concurso proceedings every single time they have been asked to do so by a petitioner who was appointed by the Mexican debtor, without exception. The objecting parties argue that the person designated as the foreign representative would have a conflict of interest and would be called upon to investigate himself. This possibility is not a disqualification from service as the foreign representative under the statute. Vitro SAB commenced its Chapter 15 case on 14 April 2011 seeking recognition in the US of the Mexican Proceeding, in furtherance of its restructuring plan for its global enterprise. The Recognition Order became effective upon entry and will continue in effect pending the outcome of the Mexican Proceeding. Vitro is now able to continue with its financial restructuring process, even if it should face further legal action with benefit of the protection granted by the Concurso Mercantil in Mexico and by Chapter 15 of the United States Bankruptcy Code, says Alejandro Snchez Mjica, Vitro“s general counsel. Founded in 1909, Vitro, S.A.B. de C.V., is the leading glass manufacturer in Mexico, and one of the largest in the world, backed by more than 100 years of experience in the industry. Headquartered in Monterrey, Mexico, the company has subsidiaries in 10 countries throughout Europe and the Americas, through which it offers high quality products and reliable services that address the needs of two distinct businesses: containers and flat glass.