On January 15, 2009, the U.S.-Mexico Chamber of Commerce in New York will host an event entitled Corporate Restructuring and Distressed Markets in Mexico.
The event includes a keynote speech by Luis Manuel Mejan, Director General of the Mexican Federal Institute of Commercial Insolvency Specialists (IFECOM), and a panel discussion led by my Strasburger & Price colleagues John Rogers and Mary Rose Brusewitz, and Steven Kargman, President of Kargman Associates, a restructuring advisory firm.
More information is available here.
Insolvent Mexican supermarket operator Comercial Mexicana, which recently received notice that its second petition for bankruptcy protection in Mexico had been rejected by a Mexican court, will probably present a third petition, according to a Sentido Comun.com report. It continues to negotiate its approximately US$2 billion of debt with creditors. Fortunately for La Comer, there is no three strikes and your out rule in Mexican bankruptcy petition filing.
BBVA’s Mexican subsidiary has commenced the seizure of assets of struggling Mexican supermarket operator Controladora Comercial Mexicana (CCM) (MXK: COMERCIUBC) valued at approximately US$100 million, according to a report in La Jornada.
After two failed attempts to obtain protection from its creditors in Mexican courts, Comercial Mexicana is now trying to negotiate an out-of-court settlement. Comercial Mexicana has not obtained a declaration of commercial competition by the relevant judicial body, so it must confront each of the creditors’ demands for payment.
As we discussed in a November post, JP Morgan Chase, Barclays Bank, and a few other major banks have filed lawsuits in New York state courts against Comercial Mexicana alleging breach of certain exchange-rate and other derivatives contracts. Those banks may also wish to investigate the Mexican remedies, if any, are that are available to them under those contracts because any U.S. judgment obtained against Comercial Mexicana would require enforcement in Mexican courts, which is a protracted process.
As discussed in November 12, 2008 Mexico Law Blog post, JP Morgan Chase and several other banks have filed lawsuits against Mexican supermarket operator Controladora Comercial Mexicana (CCM) (MXK: COMERCIUBC) alleging breach by CCM of its exchange-rate derivative contracts.
We have not yet had the opportunity to review the court filings, but based on our own research, as of November 14, 2008, the claims against CCM in New York state courts appear to consist of the following:
Mexican billionaire Carlos Slim offered his views to reporters regarding U.S. auto industry, health care, and other issues in an interview in San Antonio on November 18, 2008, summarized a Houston Chronicle report.
With respect to the auto industry, Slim suggested that struggling companies should file for Chapter 11 bankruptcy protection and renegotiate uncompetitive labor union contracts in exchange for giving workers company shares. This is a suggestion lawmakers on Capitol Hill may wish to bear in mind today as they listen to pleas from auto industry executives for a US$25 billion slice of the US$700 billion Troubled Asset Relief Program (TARP).
JP Morgan Chase has sued iconic Mexican supermarket operator Controladora Comercial Mexicana (CCM) (MXK: COMERCIUBC) in a New York state court alleging breach of its obligation to maintain collateral in its exchange-rate derivative transactions, according to a Sentidocomun.com report, which cited a Bloomberg report.
The lawsuit seeks US$477.5 million from CCM. CCM said that it had been notified of the lawsuit and that it expected to be the subject of similar actions in the next few days in the wake of its October 9, 2008 petition filed with a Mexico City bankruptcy court seeking creditor protection (concurso mercantil). The report said that Barclays, Goldman Sachs Group, and Merrill Lynch had filed similar lawsuits against CCM.
As Mexico Law Blog reported on October 27 and 29, 2008, CCM’s October 9, 2008 bankruptcy filing was rejected by the Mexican bankruptcy court for undisclosed reasons; following the rejection, the company announced plans to immediately file a new petition, which it did on October 28 or 29, 2008. No news has been issued confirming the acceptance or rejection by the Mexican bankruptcy court of the company’s new petition.
In October 2008, CCM’s debt inflated to US$2 billion following huge losses on exchange-rate derivative bets against the dollar, according to a Reuters report. CCM said in late October that it had obtained loans worth up to MX$3.327 billion to continue paying suppliers. One of the loans, for up to MX$3 billion, is guaranteed by Mexican development bank Nacional Financiera (NAFIN).
Controladora Comercial Mexicana (MXK: COMERCIUBC) (frequently called La Comer in Mexico) filed a new petition for bankruptcy protection (concurso mercantil) under Mexican law after the court rejected its first petition, which was filed on October 9, 2008, according to a report in El Economista.
The company said in the report that it is invoking its rights under the Mexico’s Business Reorganization Law (Ley de Concursos Mercantiles) and has therefore suspended the payment of all of its financial obligations.
It is not clear why Comercial Mexicana’s original bankruptcy petition was rejected, but it is possible that the rejection was based on a technicality and that the court will accept the company’s new petition. Article 20 of the Business Reorganization Law contains the specific requirements that a petition for bankruptcy protection must contain under the statute, which include, among other things, the audited financial statements of the petitioner for the three years preceding the filing of the petition, a list of creditors and debtors of the petitioner and their names and addresses, the maturities of all debts of the petitioner, and an inventory of all assets of the petitioner.
Monterrey-based glassmaker Vitro, S.A. (NYSE: VTO) may be forced to file for bankruptcy protection (concurso mercantil) in Mexico because of derivative losses in natural gas, according to a Bloomberg report.
The report said that Vitro’s Binswanger Glass unit is the biggest glass-retailer in the U.S., with more than 100 stores in 22 states.
Copyright © 2008 by John Dorsey
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