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.

Mexico Law Blog will not publish any new posts from December 14-21 because I (John Dorsey) will be in Sao Paulo and Rio de Janeiro, Brazil on business.  Posting will resume the following week.

Feel free to contact me if you are in Brazil and would like to have coffee or a caipirinha.

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.

Mexico’s senate approved a bill giving a government regulator authority to order pension funds to modify investment portfolios if they are judged to be too risky, according to a Bloomberg report.  The bill now goes to the lower house of Congress.

Carlos Slim’s industrial conglomerate, Grupo Carso, S.A. de C.V. (MXK: GCARSOA1), plans to spin off its real estate assets into a new company that would trade on the Mexican stock market, according to a Reuters report.  The company would likely include Carso’s mall construction operations, the report said.

Carso, which recently announced a US$800 million multi-use real estate project near Mexico City, has industrial, retail, infrastructure and construction businesses.

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.

Grupo Bimbo, a major Mexican baking company, is in discussions with Dunedin Holdings Sarl, a subsidiary of Canadian food processing and distribution company George Weston Limited, regarding a possible acquisition by Bimbo of Dunedin’s U.S. baking business, according to a report in El Universal that cited a Bimbo securities filing with the Mexican Stock Exchange (Bolsa Mexicana de Valores).

Carlos Slim Helu plans to invest nearly US$4 billion next year to grow Telmex (NYSE: TMX), his Mexican fixed-line telephony business, and America Movil (NASDAQ: AMOV), his Latin American mobile phone business, according to a Reuters report.

He will invest approximately US$950 million in Telmex, with possible additional investment if the Mexican government authorizes Telmex to operate so-called triple play services — cable, Internet, and phone services using a single broadband connection.  (How is that for a carrot to Mexican government officials charged with granting Slim triple-play authority?)

He will invest approximately US$3 billion in America Movil to expand its cell phone network in Latin America.

Whoops-a-daisy!  The U.S. government made a “mistake” buying troubled assets from banks, said Carlos Slim Helu, the world’s second richest man, at a conference on stock markets in Mexico City, as reported by Bloomberg.  Slim said that the assets are hard to manage.

He added that the recent global financial crisis began in the U.S., where “there was bad regulation and worse supervision” of derivatives instruments.

As we previously reported, in lieu of a government-sponsored automotive industry bailout, Slim has suggested that struggling U.S. automakers file for Chapter 11 bankruptcy protection and renegotiate uncompetitive labor union contracts in exchange for giving workers company shares.

If Slim is correct regarding U.S. government purchases of troubled bank assets and the auto industry bailout, which congress appears poised to enact tomorrow, the U.S. government may have racked up two whoops-a-daisies for taxpayers in the early stages of the financial crisis, a high score considering that each whoops-a-daisy is worth a few billion dollars.

The cover story in the December 22, 2008 issue of Forbes titled “The Next Disaster” offers a bleak view of the challenges facing Mexico amid rising social violence in the wake of Calderon’s crackdown on the drug trade and economic recession in the U.S., Mexico’s main trading partner. 

The title of the article, which is probably good for magazine sales, and its subject matter, contrasts sharply to comments in the same Forbes issue by Mexican billionaire Ricardo Salinas Pliego, who recently purchased a majority stake in ailing retailer Circuit City, Mexican Ambassador to the U.S., Arturo Sarukhan, and U.S. Ambassador to Mexico, Tony Garza Jr., all of whom were interviewed in adjacent columns. 

Salinas, having lived and profited through Mexico’s various crises, was not improbably sanguine about Mexico’s prospects, commenting: “I have been through so many crises.  This is just one.  And I’ve seen worse.”  Ambassador Sarukhan emphasized Mexico’s progress in rooting out corruption in government and the high demand for illicit drugs in the U.S.  Ambassador Garza said, “I am actually quite optimistic.  Long term, I think Mexico’s economic prospects are strong.”

The article includes a map illustrating the drug cartels that control various geographic regions of Mexico; cartel control over most of the country’s territory is disputed.  90% of the cocaine that enters the U.S. comes from Mexico, the article said.

Although Mexico’s economy will likely return to growth when the U.S. emerges from recession, until the U.S. can dramatically reduce black market demand (which appears to be inelastic) for illicit drugs, social violence will probably (and sadly) remain a major obstacle for Mexico’s long-term economic development.