Mexico’s third largest retail store operator, Controladora Comercial Mexicana (CCM), filed a petition for bankruptcy protection (Concurso Mercantil) with the Federal District (Mexico City) Court on October 9, 2008, in an effort to restructure its obligations with creditors, according to a report in El Financiero. 

A Concurso Mercantil is based on the Ley de Concursos Mercantiles (the “LCM”) enacted in May 2000, which provides for two different and separate proceedings: conciliation and liquidation (quiebra).  The initial conciliation phase lasts up to 185 days and is subject to extension for two 90-day periods, subject to certain conditions. The objective of the conciliation phase is to reach a restructuring agreement (Convenio Concursal) between the debtor and its creditors. Such an agreement (Convenio Concursal), among a debtor and its creditors, if approved by the Court, has the effect of ending the Concurso Mercantil; the LCM provides for specific creditor voting rules and, subject to certain conditions, dissenting unsecured creditors are bound by a Court approved agreement. If the debtor does not reach an agreement with its creditors within the statutory time period, the debtor is put into liquidation (quiebra) during which phase the debtor’s assets are liquidated.

The Concurso Mercantil petition filed by CCM does not encompass CCM’s subsidiaries, which include Comercial Mexicana, Restaurantes California, CostCo de Mexico, and certain real estate companies.  CCM also operates City Market, Provecomer, and La Comer en tu Casa retail operations in Mexico, among others.  It is not clear whether those latter operations are included in the bankruptcy proceeding.

Credit Suisse Mexico is assisting CCM with is restructuring plan.  CCM has announced that it is seeking financing to continue operations.