The First Chamber of the Supreme Court recently handed down a decision dealing with the constitutionality of one of the timeframes set by the Bankruptcy Law for filing a proof of claim in bankruptcy proceedings.
According to the law, a creditor with a claim against a debtor has three opportunities to file a proof of claim. It may do so within:
- 20 calendar days of the date of publication of the order for relief;
- five calendar days of the filing of a provisional list of creditors by the conciliator; or
- nine business days of the issuance of the order of recognition, ranking and preference claims.
The court's decision addressed the second of these timeframes. According to the ruling, this term is contrary to the right of "effective access to justice", as safeguarded under Article 17 of the Constitution - by referring to 'calendar days', it includes days on which creditors may not exercise their right before the court. Rather, the provision in question should refer to 'business days' - that is, the days on which the courts are open and the creditor can review the court file and prepare a proof of claim. By including within the relevant timeframe days on which the court file is unavailable and the creditor may not submit its views, the provision in question deprives the creditor of effective access to justice.
Accordingly, the court proposed that the second timeframe be regarded as five business days. According to the spirit of the law, all terms set forth therein should be regarded as business days, rather than calendar days, except when the law provides otherwise. In this context, the law provides for five calendar days, but the word 'calendar' should be disregarded and the default rule of the law should apply.
The decision is not binding at present, but it sets a significant precedent. Moreover, if it is confirmed three more times, by at least four out of five votes, it may become binding on all federal courts in Mexico.
The extension of the timeframe to file a proof of claim is to the advantage of creditors. Although the extension may appear slight, in practice it may provide a significant opportunity to assemble the necessary documents and complete the formal requirements for filing a proof of claim, bearing in mind that Mexico's procedural rules are particularly strict and, in many circumstances, set the bar for compliance too high.
At first glance, it might seem that according to the First Chamber's reasoning, the first opportunity for filing a proof of claim is also unconstitutional, as it also refers to a calendar-day period. However, in this case the creditor need not review the court file before submitting its proof of claim, as creditors do not require access to the court records in order to do so. Furthermore, in the event that the 20 calendar-day period ends on a non-working day, the law provides that the timeframe will extend until the next business day.
In light of the above, the first opportunity for filing a proof of claims appears to comply with the constitution; however, arguments to the contrary may yet be raised.
For further information on this topic please contact Luis Enrique Graham or Angelica Huacuja at Chadbourne & Parke by telephone (+52 55 3000 0600), fax (+52 55 3000 0698) or email ([email protected] or [email protected]).