Vitro Requests Reconsideration of Decision Denying Use of Mexican Restructuring Plan in U.S.
December 13, 2012
by Penny Stacey, email@example.com
Vitro officials have filed a petition for “en banc” consideration of a recent decision by the Fifth Circuit Court of Appeals in New Orleans affirming an original ruling denying Vitro SAB’s use of a Mexican bankruptcy restructuring plan in the U.S.
“En banc” consideration would provide for a review of the case by a panel of judges.
“This appeal merits en banc consideration because it has wide-reaching implications for international cooperation in insolvency proceedings and for the United States’ role as a leading commercial and legal center in the global marketplace,” writes the company.
The petition continues, “The panel correctly concluded that [Bankruptcy Code] section 1507 ‘theoretically provides for the relief Vitro seeks’ but incorrectly imposed a burden on Vitro to
show that the circumstances of the Mexican Proceeding ‘are substantially in accordance with the circumstances that would warrant such relief in the United States.”
Company officials further argue that the decision does not coincide with “principles of international comity.”
“Placing this burden on foreign representatives is irreconcilable with principles of international comity embodied in Chapter 15,” continues the petition. “If every outcome of a foreign insolvency proceeding must substantially accord with the likely outcome available under the Bankruptcy Code to be enforced in the United States, there would be little reason for foreign representatives to seek Chapter 15 relief.”
Vitro spokesperson Roberto Riva Palacio provided the following statement to USGNN.com™ regarding the newly filed petition for en banc consideration.
“We are vigorously pursuing our legal options, and are confident that our arguments warrant review by all judges of the Fifth Circuit,” he says. “The refusal of the panel of Fifth Circuit Court judges to enforce Vitro’s Mexican restructuring in the U.S. departs from established legal precedent, fails to accord with the principles of international comity Chapter 15 was intended to enhance in cross-border insolvency proceedings, and deals a blow to the mutual respect typically displayed between U.S. and Mexican courts. Unless reversed, the panel’s decision calls into question the efficacy of Chapter 15 as a means for foreign companies, such as Vitro, to globally restructure over the objections of a minority of holdout creditors in the U.S., such as the vulture funds in this case.”
At the time of the original decision in November, Vitro officials had expressed their disappointment in the decision.
“We are disappointed by the Fifth Circuit Court’s decision in this matter,” said Claudio Del Valle, Vitro’s chief restructuring officer, at that time. “The refusal to reverse the Bankruptcy Court’s decision and enforce Vitro’s Mexican restructuring in the U.S. is contrary to prior Mexican restructurings, which have been recognized and enforced in the U.S. without exception, including several restructurings which were very similar to Vitro’s in their treatment of intercompany claims and modification of non-debtor subsidiary guarantees.”
Company officials also have stressed that the ongoing court proceedings should not affect its ability to do business.
“While we analyze the circuit court’s ruling and consider our possible legal next steps in order to have our restructuring plan enforced in the U.S. as it has been in Mexico, we are also prepared to continue serving our U.S. customers due to the fact that our main subsidiary is protected by a separate and distinct Concurso proceeding,” added Del Valle.
At press time, the court had not yet ruled on the petition for en banc consideration.