The new Commercial Bankruptcy Law in Mexico was published in the Official Gazette on May 12 2000 and came into force on May 13 2001. The law builds on the now repealed Bankruptcy and Suspension of Payments Law, which dealt with the judicial bodies participating in the judicial procedure of commercial bankruptcy.
The law sets forth the two procedural stages by which a commercial bankruptcy is processed: conciliation and bankruptcy. Any commercial bankruptcy process may be filed by the debtor, by any creditor or by the public prosecutor, in order to prove that the debtor has no liquidity or insufficient current assets or cash flow to face its obligations. However, a commercial bankruptcy process for banks may only be filed by the National Banking and Securities Commission, the institution in charge of banking regulation under Mexican law.
Once the bankruptcy of the debtor has been declared the law establishes a six-month term for the debtor to reach an amicable arrangement with its creditors. This period may be given two six-month extensions.
During the commercial bankruptcy three bodies are involved: the administrator, the conciliator and the trustee. They are appointed by the Institute of Specialists in Commercial Bankruptcy, which is subordinate to the Board of the Judiciary of the Federal Judicial Power.
The adminstrator must ascertain whether the debtor has liquidity to face its obligations to its creditors.
The conciliator is appointed after the commercial bankruptcy judgment is rendered. His main role is to reach a conciliatory agreement within the allowed six-month period. In addition, and in order for the commercial bankruptcy process not to be suspended or disrupted, the conciliator is also empowered to comprise and submit a report on the list of creditors to the judge, in the event that a conciliatory agreement is reached.
The trustee may be the same person as the conciliator. His main purpose is to sell the commercial operation unit to the highest bidder, so that creditors may be paid with the proceeds according to the priorities and categories established under the law.
To act as an administrator, conciliator and/or trustee of a commercial bankruptcy, a person must be registered at the Institute of Specialists in Commercial Bankruptcy, and have passed technical examinations in legal, accounting, financial and economic areas.
All these officers must act as diligently as possible, and will incur civil liabilities claimed by debtors or creditors suffering any damage due to negligence or unlawful acts.
For further information on this topic please contact Jaime R Guerra González, Alonso Rivera Gaxiola or Alfonso Peniche at Guerra González y Asociados SC by telephone (+52 55 5543 9270) or by fax (+52 55 55436621 or +52 55 5543 6624) or by e-mail ([email protected]).
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