{"id":108126,"date":"2025-07-08T10:46:58","date_gmt":"2025-07-08T10:46:58","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=108126"},"modified":"2025-08-20T15:09:29","modified_gmt":"2025-08-20T15:09:29","slug":"mexico-restructuring-insolvency","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/mexico-restructuring-insolvency\/","title":{"rendered":"Mexico: Restructuring &amp; Insolvency"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-108126","comparative_guide","type-comparative_guide","status-publish","hentry","guides-restructuring-insolvency","jurisdictions-mexico"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Sainz Abogados<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2020\/06\/Sainzlinkedin_azul.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Sainz Abogados<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2020\/06\/Sainzlinkedin_azul.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Restructuring &amp; Insolvency laws and regulations applicable in Mexico<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What forms of security can be granted over immovable and movable property? What formalities are required and what is the impact if such formalities are not complied with?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Mexican law provides two main secured transactions: mortgage and pledges. The most common security for immovable property is the mortgage, which is governed by state law. This security requires to be documented in a notarial instrument and for its perfection it shall comply with the filing of its registration so that it may be opposable against third parties. Depending on the asset granted as collateral there are some cases where additional filings or registration are required (with the Federal Telecommunication Registry, Maritime Registry, etc). However, there are some cases where the security does not require registration before public record offices and a direct notification to the debtor of the collector\u2019s rights is sufficient. The most common securities for movable or intangible assets are the guaranty trusts and the floating lien pledges, governed by federal law. The Mexican laws provide that all rights and movable property can be pledged under a floating lien pledge \u2013 except for those rights that are strictly personal to its holder \u2013 which is the case of equity quotas (stock pledge). The type of the applicable remedy or legal action will depend on the type of industry and security, if any, implemented over assets of the debtor or the guarantors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What practical issues do secured creditors face in enforcing their security package (e.g. timing issues, requirement for court involvement) in out-of-court and\/or insolvency proceedings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Mortgages must be executed through a judicial procedure. Mexican law provides for a special procedure for the execution of mortgages. The procedure is divided in two phases, the general phase, in which the creditor and the debtor file their evidence and pleadings, and the execution phase, in which the property is finally sold to pay the debtors secured obligations.<\/p>\n<p>Pledges can be executed via a judicial or extrajudicial procedure. The extrajudicial execution procedure is optional and is ideal in case there is no controversy over the enforceability of the credit, its amount and the delivery of the property over which the pledge was created. The judicial procedure is similar to that of the mortgage, to the extent that the creditor must file a claim against the debtor, for the judge to order the delivery of the property and the sale of it to pay the creditor. The timelines for the execution of securities would depend on multiple factors, but usually obtaining a final order takes between 12 and 30 months. A creditor may foreclose on the collateral through the enforcement of its creditor\u2019s rights and by following the special enforcement procedure applicable to the type of collateral granted in its favor (stock pledge; floating pledge over assets; mortgage; special mortgage over concessions, etc). However, if a concurso procedure has been admitted by the court, then the creditors will be prevented to foreclose on the collateral or sell collateral in a private sale while the procedure is in progress. Likewise, special measures or injunctions might be granted to the debtor in order for the latter to preserve its assets and operations, and to protect the debtor from separate or individual creditors\u2019 actions seeking the enforcement of collateral or seizure or attachment over a debtor\u2019s assets. Upon the insolvency declaration by the competent court, a stay is imposed over enforcement of the creditors\u2019 rights (including secured creditors) and remains in force throughout the conciliation stage.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What restructuring and rescue procedures are available in the jurisdiction, what are the entry requirements and how is a restructuring plan approved and implemented? Does management continue to operate the business and \/ or is the debtor subject to supervision? What roles do the court and other stakeholders play?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Concursos Law provides for a single insolvency proceeding known as concurso procedure. The concurso procedure consists of two main stages, conciliation stage and bankruptcy stage, each of them supervised by the Federal Institute of Specialists in Insolvency and Bankruptcy Procedures (IFECOM). The first stage of a concurso procedure is the conciliation stage, which is purported to encourage a binding reorganization agreement between the debtor and its creditors (restructuring plan or creditors\u2019 agreement) and therefore avoid the debtor\u2019s liquidation. During the conciliation stage, the debtor shall negotiate with its creditors to reach a creditors\u2019 agreement or reorganization agreement. If a creditors\u2019 agreement is reached and approved by the court within the term provided by law, the concurso procedure ends. To be effective, the reorganization agreement shall be subscribed by the debtor and the recognized or acknowledged creditors representing over 50% of the sum of:<\/p>\n<ul style=\"padding-left: 0\">\n<li>the amount recognized to the totality of the recognized or acknowledged unsecured and subordinated creditors; and<\/li>\n<li>the amount recognized to these recognized or acknowledged secured creditors or with special privilege subscribing the reorganization agreement.<\/li>\n<\/ul>\n<p>Pursuant to the Concursos Law, should the subordinated (intercompany) creditors represent more than 25% of all the acknowledged loans, the majority of the remaining unsecured creditors will vote on the restructuring agreement without considering the subordinated creditors. The conciliator will also collaborate in the decision regarding whether the business will continue to be managed by the debtor (debtor-in possession), or whether it is necessary to remove existing management from the operation of the company. The second stage of a concurso procedure, if applicable, consists of the liquidation stage. The debtor may be declared in liquidation if the conciliation stage ends without the parties reaching a creditors\u2019 agreement; the debtor fails to comply with the creditors\u2019 agreement; or the debtor requests its liquidation, or the conciliator requests the debtor\u2019s liquidation and the court agrees to grant it.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a debtor in restructuring proceedings obtain new financing and are any special priorities afforded to such financing (if available)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Financing may be granted to the debtor outside of a statutory or formal process. Likewise, liens may be granted, but the debtor has to be very cautious to make sure that such financing is granted for the purpose of preserving the ordinary course of business and shall be aware of the elements of fraudulent transfer in order to avoid the potential risks associated therewith. Any debtor-in-possession (DIP) loan will be repaid before any other loan, pursuant to the order of preference rules provided in the Concursos Law. This special or urgent financing is deemed as a claim against the debtor\u2019s estate and would have preference over unsecured creditors and shall be aimed to preserve the ordinary course of business and is intended to provide the required liquidity during the procedure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a restructuring proceeding release claims against non-debtor parties (e.g. guarantees granted by parent entities, claims against directors of the debtor), and, if so, in what circumstances?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is not uncommon for a plan of reorganization to provide a release of claims against directors of the debtor. Now, with respect to guarantor and\/or joint obligors the Concurso Law with only authorized the third-party release with the consent of the impair creditor.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do creditors organize themselves in these proceedings? Are advisory fees covered by the debtor and to what extent?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Creditors can organize freely in accordance to their interests. Committees are common and they usually agree on the terms for retaining advisors. Their expenses may be reimbursed by the debtor if such agreement is reached.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the test for insolvency? Is there any obligation on directors or officers of the debtor to open insolvency proceedings upon the debtor becoming distressed or insolvent? Are there any consequences for failure to do so?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The substantive test for a debtor to be declared insolvent is that it has generally failed to perform its obligations. For the purposes of the Concursos Law, an individual or entity has generally failed to perform its obligations if it has defaulted its obligations contracted with two or more different creditors and if the obligations of the debtor which have been due for at least 30 days represent, at least, 35% of all the debtor\u2019s obligations on the date on which the demand or insolvency petition is filed (or depends, or both, if it was an involuntary or voluntary petition, respectively) or the debtor does not have any of the following assets in an amount sufficient to perform at least 80% of its obligations due on the date on which the demand or insolvency petition is filed: (i) cash and demand deposits; (ii) term deposits and investments becoming exercisable or maturing in a term no longer than 90 calendar days following the date on which the demand or insolvency petition is filed before the court; (iii) customer receivables with a maturity date not exceeding 90 calendar days following the date on which the demand or insolvency petition was filed before the court; or (iv) securities or negotiable instruments available at the relevant markets which may be sold within a term of 30 business days, with a known value on the date on which the demand or insolvency petition was filed before the court. Regarding liabilities, penalties, or other implications for failing to comply with mandatory proceedings, the most evident and immediate implication for a company when not commencing a timely insolvency proceeding is that its contracts will be terminated due to defaults and breaches and it may also fail in continuing to be a qualified bidder, if that is the case. Likewise, creditors will likely begin to exercise remedies and actions such as the enforcement of guaranties. Directors of a company engaging in any malicious or illegal act or conduct that causes the non-performance of the company\u2019s payment obligations, might be held liable to civil actions or even subject to criminal prosecution, in the event of fraudulent acts. However, the directors may not be liable for continuing to operate a company under financial distress.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What insolvency proceedings are available in the jurisdiction? Does management continue to operate the business and \/ or is the debtor subject to supervision? What roles do the court and other stakeholders play? How long does the process usually take to complete?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As explained, the Concursos Law provides for a single insolvency proceeding known as concurso mercantil (conciliation\/restructuring or insolvency\/bankruptcy procedure).<\/p>\n<p>The applicable laws to restructurings and insolvency proceedings are mainly the Concursos Law, the General Law on Business Organizations, the Law of Credit Institutions and the Law of Insurance and Bonds Institutions. The debtor itself, any creditor, the district attorney, a judge, and tax authorities in their capacity as creditors, may file insolvency petition. With the petition filed by creditors or authority (involuntary) or the insolvency petition filed by the company (voluntary), as the case may be, a guaranty or bond must be posted to guaranty the examiner\u2019s fee payment.<\/p>\n<p>The first stage of a concurso procedure is the conciliation stage, which is purported to encourage a binding reorganization agreement between the debtor and its creditors and, thus avoid the debtor\u2019s bankruptcy or liquidation (restructuring plan or creditors\u2019 agreement). The conciliation stage shall not last more than 185 calendar days, unless extended for up to two additional consecutive periods of 90 calendar days each; provided, however, that in no event shall the conciliation stage last more than 365 calendar days. Once the commercial insolvency of the debtor has been declared, the conciliation stage shall commence, and attempts to find a formula to allow the debtor and creditors to come to an agreement will begin.<\/p>\n<p>The company may continue to operate the business in the ordinary course as a debtor-in-possession and in this case, the conciliator retains the authority to resolve, among other things: (a) non-ordinary course dispositions of assets; (b) assumption or rejection of material contracts; and (c) after a Concurso Judgment has been entered, preferred and senior financing against the estate (equivalent to debtor-in-possession financing in a Chapter 11 proceeding).\u00a0\u00a0 Under Article 81 of the Concursos Law, the conciliator may request the Mexican Bankruptcy Court to remove the debtor\u2019s management in certain circumstances.<\/p>\n<p>The Conciliation Stage ends upon (a) an agreement among the company and a majority of its creditors with respect to a consensual restructuring approved by the Mexican Bankruptcy Court in the form of a Plan of Reorganization of Concurso agreement (convenio concursal); (b) the expiration of the term limit set forth above, at which time the Concurso proceeding will move to the Liquidation Stage; (c) the request of the conciliator and with the Mexican Bankruptcy Court\u2019s approval of such request; (d) the company\u2019s request; or (e)\u00a0 the creditors\u2019 request with the company\u2019s agreement.\u00a0 In the case of (b) through (e), the company enters the Liquidation Stage (<em>Quiebra<\/em>) of the Concurso Mercantil following the Mexican Bankruptcy Court\u2019s entry of a formal judgment for liquidation (\u201cLiquidation Judgment\u201d).<\/p>\n<p>If the Concurso Mercantil proceeds to the liquidation stage, the IFECOM appoints a receiver to operate the company in the liquidation stage.\u00a0 The receiver makes public the order for liquidation and files a report concerning the company\u2019s books and records, assets, and balance sheet.\u00a0 All of the company\u2019s assets are turned over to the receiver.\u00a0 The receiver then takes steps to liquidate or otherwise dispose of the debtor\u2019s assets for the highest possible price pursuant to the rules and procedures expressly provided in the Concursos Law.\u00a0 The proceeds are then used to provide distributions to creditors in accordance with the claims and rankings set forth in the Recognition Judgment.\u00a0 The receiver follows the Concursos Law\u2019s strict rules of publicity and operability to guaranty the transparency of a sale procedure and follows the guidance and forms determined by the IFECOM.<\/p>\n<p>The liquidation stage is supervised by the IFECOM and the receiver, and the length of the procedure will vary depending on the type of industry and the time required to auction, sell, and reach agreements among creditors to offset claims.<\/p>\n<p>The Liquidation Stage is aimed to terminate any pending company operations, collect any amounts in favor of the debtor, and liquidate any outstanding amounts of the debtor in favor of creditors and, ultimately, its shareholders.\u00a0 The liquidation concludes with the cancellation of the company\u2019s registration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What form of stay or moratorium applies in insolvency proceedings against the continuation of legal proceedings or the enforcement of creditors\u2019 claims? Does that stay or moratorium have extraterritorial effect? In what circumstances may creditors benefit from any exceptions to such stay or moratorium?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Importantly, the simple filing entity receives no generalized automatic relief upon the filing of a Voluntary or Involuntary Petition until the admission to the Visita Stage (as defined below) is granted. However, it not uncommon that upon the admission of the petition, the Concurso Court issues preemptive measures to enjoin any attachment of assets.<\/p>\n<p>The Concurso Judgment generally stays all acts of collection by creditors.\u00a0 Notably, however, entry of the Concurso Judgment does not necessarily stay all lawsuits involving the company; rather, it stays proceedings concerning the attachment of assets, enforcement decisions, and execution of judgments against the debtor.\u00a0 There are some exceptions, including, for example, labor proceedings.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do the creditors, and more generally any affected parties, proceed in such proceedings? What are the requirements and forms governing the adoption of any reorganisation plan (if any)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>To be effective, the reorganization agreement shall be subscribed by the debtor and the recognized or acknowledged creditors representing over 50% of the sum of: (i)the amount recognized to the totality of the recognized or acknowledged unsecured and subordinated creditors; and (ii) the amount recognized to these recognized or acknowledged secured creditors or with special privilege subscribing the reorganization agreement.<\/p>\n<p>Pursuant to the Concursos Law, should the subordinated (intercompany) creditors represent more than 25% of all the acknowledged loans, the majority of the remaining unsecured creditors will vote on the restructuring agreement without considering the subordinated creditors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do creditors and other stakeholders rank on an insolvency of a debtor? Do any stakeholders enjoy particular priority (e.g. employees, pension liabilities, DIP financing)? Could the claims of any class of creditor be subordinated (e.g. recognition of subordination agreement)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As per the Concursos Law, in the conciliation stage of a concurso proceeding, creditors are given the opportunity to prove their claims and become recognized creditors. The Concursos Law classifies creditors into the following categories: a. secured creditors (with mortgages or pledges), and tax secured claims; b. general labor (other than those mentioned below) and unsecured tax claims; c. creditors with special privilege (recognized in the law with such privilege or withholding right); d. common creditors in commercial transactions and in other transactions (unsecured creditors); and e. subordinated creditors (intercompany creditors or those subordinated by contract). Secured creditors (with security rights) are paid first with the proceeds from the sale of mortgaged or pledged items. If the items have a value or a price in excess of the debt, any such excess is directed to cover subsequent debt payments to other creditors. If the price does not cover the debt, preferred or with special privilege creditor may participate, pro-rata, regardless of dates, as a common creditor, to collect the remaining amount. Subsequently, the creditors with special privilege shall be paid. Unsecured creditors collect pro-rata from the balance after the initial sale of assets to satisfy all prior debts. General Labor credits and tax credits shall be paid after payment of the secured creditors, but prior to the payment of credits with special privilege, unsecured creditors and subordinated creditors. However, it is important to note that in addition to these categories, there are other types of credits that have priority over all other categories: (i) severance payments to employees and accrued and unpaid salaries bearing in mind the wages for the last two working years prior to the date of declaration of insolvency (management included) ; (ii) expenses incurred in the administration of the estate of the debtor as approved by the Conciliator and\/or Court, and\/or \u201cDIP\u201d loans authorized by the Court, or by the Conciliator, to preserve the liquidity and ordinary operations of the debtor; (iii) claims incurred to cover the general expenses to preserve the assets of the debtor (their conservation and administration; this shall not include the debtor\u00b4s advisors fees); and (iv) claims derived from judicial or out-of-court proceedings for the benefit of the estate of the debtor. Pursuant to the Concursos Law, unsecured creditors are paid after the secured creditors, labor creditors and creditors with special privileges but prior to the payment of credits with subordinated credits. Unsecured creditors are the creditors that are not considered as secured or with special privilege. Subordinated Creditors are the last creditors to be paid in a concurso proceeding. As per the Concusos Law, subordinated creditors are those creditors whose credits have been expressly subordinated; as well as unsecured credits granted by: (i) the administrator, main directors or any member of the board of directors of the debtor, shareholders that holds more than 50% (fifty per cent) of the equity quota of the debtor or any other person that holds control, directly or indirectly over the debtor; or (ii) any other company with the same administrator, board members or main directors. Equity holders will receive any remaining amount after having paid all type of creditors. They are not paid prior to any other creditor.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a debtor\u2019s pre-insolvency transactions be challenged? If so, by whom, when and on what grounds? What is the effect of a successful challenge and how are the rights of third parties impacted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Intentional fraudulent transactions and certain other transactions may be set aside or declared as void when it is established that the debtor received inadequate consideration. According to the Concursos Law, any of the following transactions may be invalidated if entered into during the period starting on the day that is 270 calendar days prior to the declaration of insolvency by a competent court:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>transactions executed by a debtor prior to the declaration of insolvency with the intention of defrauding creditors (knowledge of the counterparty is not required if the act was gratuitous);<\/li>\n<li>gratuitous transactions;<\/li>\n<li>undervalue transactions;<\/li>\n<li>transactions not effected at an arm\u2019s-length basis;<\/li>\n<li>waivers of debts agreed by a debtor;<\/li>\n<li>performance of obligations prior to their maturity date; and<\/li>\n<li>discounts made by a debtor.<\/li>\n<\/ol>\n<p>In line with the foregoing, a presumption exists that the following transactions are executed in fraud of creditors, unless the debtor proves good faith: creation of a new security interests or the increase of any existing security interests if the original obligation did not provide for it; payments in kind when such form of payment was not originally agreed and; transactions entered into by a debtor with related individuals or entities, such as its spouse, cohabiting partner, relatives, members of the board or decision-making individuals within the business, or companies where at least 51% of their capital stock is owned or voted by any of the foregoing individuals. Challenges may be brought by recognized creditors, the conciliator, or the intervener (intervening administrator) appointed by the creditors. The party that challenges the transaction bears the burden of proof. Challenges filed on solid basis uphold. Per the request of the conciliator, liquidator, intervener or any creditor, the judge may extend the 270-day term, but such term may not exceed three years. If subordinated creditors exist (intercompany claims) a 540-day term will apply with respect to the transaction in which these are involved.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How existing contracts are treated in restructuring and insolvency processes? Are the parties obliged to continue to perform their obligations? Will termination, retention of title and set-off provisions in these contracts remain enforceable? Is there any ability for either party to disclaim the contract?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The general rule is that contracts must be honored by the debtor, unless the conciliator rejects the contract. If the conciliator does not reject the contract, the debtor shall perform its obligations.<\/p>\n<p>With some exceptions, any contractual stipulation, which sets modifications that worsen the contract terms for the debtor, shall be deemed as not included.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What conditions apply to the sale of assets \/ the entire business in a restructuring or insolvency process? Does the purchaser acquire the assets \u201cfree and clear\u201d of claims and liabilities? Can security be released without creditor consent? Is credit bidding permitted? Are pre-packaged sales possible?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>During insolvency proceedings, the sale of assets to protect the ongoing concern of the debtor shall be subject to the conciliator\u00b4s approval. Once the liquidation stage is declared, the receiver may proceed to the sale of assets and rights of the estate with the purpose of maximizing the value of the profit to be obtained, while considering the convenience of keeping the company in operation. The sale shall be made through a public bid pursuant to the Concursos Law provisions The receiver may request the judge\u2019s authorization to sell any asset through a proceeding different to the public bid when they feel a higher value will be obtained. The judge informs the debtor, recognized creditors and intervenors of this intent and will grant them a term within which to provide any objections The purchaser will acquire good title as long as the sale is conducted in the same terms as a public auction. The receiver shall follow the rules of publicity and operability to guaranty the transparency of a sale procedure. A security interest cannot be released without the creditor\u2019s consent.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What duties and liabilities should directors and officers be mindful of when managing a distressed debtor? What are the consequences of breach of duty? Is there any scope for other parties (e.g. director, partner, shareholder, lender) to incur liability for the debts of an insolvent debtor and if so can they be covered by insurances?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Owners\/shareholders may be potentially liable to creditors pursuant to the provisions of civil and criminal regulations. The directors of a company that has not been declared insolvent by a competent court may not be liable for continuing to operate a company under financial distress. However, the transactions related to the collection of a creditor\u2019s rights could be subject to review when the company is declared insolvent. In the event that the company is declared insolvent, directors engaging in any malicious act or conduct that causes the non-performance of the company\u2019s payment obligations might be liable to civil actions or even criminal liability, if those acts are proven to be fraudulent. The Concursos Law provides for events during which a director or managing officer will become liable to the debtor, for the benefit of the estate of the company in a concurso procedure, for any damages and losses of anticipated earnings caused by any unlawful decision they had made, provided they cause damage to the estate of the debtor which led to the insolvency situation of the company. This is regardless of any liability incurred by the director or managing officer under any other law. Unless good faith and compliance with the duties of care and loyalty can be evidenced members of the board of directors, as well as relevant employees, of the debtor shall be liable for damages and losses due to some of the following activities: voting in board meetings or making decisions regarding the estate of the debtor regardless of a conflict of interest; favoring a shareholder or group of shareholders to the detriment of other shareholders; obtaining, due to their position and without legitimate cause, direct or indirect economic benefits; producing, publishing, providing or ordering information they acknowledge is false; ordering or failing to register operations of the debtor or modifying the registry to conceal the real nature of the operations performed, affecting any element of the financial statements; ordering or accepting the registration of false information in the debtor\u2019s books; destroying, modifying or ordering the destruction or modification of systems or accounting registries or the documentation on which these are based; and in general, committing malicious or illegal acts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do restructuring or insolvency proceedings have the effect of releasing directors and other stakeholders from liability for previous actions and decisions? In which context could the liability of the directors be sought?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No. However, as explained above such releases could be obtained through the reorganization plan.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Will a local court recognise foreign restructuring or insolvency proceedings over a local debtor? What is the process and test for achieving such recognition? Does recognition depend on the COMI of the debtor and\/or the governing law of the debt to be compromised? Has the UNCITRAL Model Law on Cross Border Insolvency or the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments been adopted or is it under consideration in your country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>According to the Concursos Law, a foreign proceeding is defined as a collective or universal proceeding, whether judicial or administrative, including provisional proceedings, followed in a foreign state pursuant to a law governing bankruptcy, liquidation, or insolvency matters of the debtor; as a result of these proceedings, the property and businesses of the merchant may result subject to the control or supervision of a foreign court, for purposes of reorganization or liquidation. The Concursos Law recognizes foreign proceedings in bankruptcy, insolvency and reorganization matters, and it recognizes foreign representatives appointed through a recognition request. In this regard, the Concursos Law recognizes foreign proceedings when legally held in a foreign country in accordance with bankruptcy or insolvency laws applicable to the debtor due to its activities, the location of assets or other similar causes. The Concursos Law states that any representative of a foreign bankruptcy procedure may request the presiding Mexican court for the recognition of the foreign bankruptcy procedure during a concurso procedure. In terms of the Concursos Law, there are two ways under which a Mexican court can recognize a foreign bankruptcy procedure: (i) as a principal procedure, when the foreign procedure is brought to a court with jurisdiction in the place where the business has its main place of interests; and (ii) as a non-principal procedure, when the foreign procedure is brought to a court with jurisdiction in the place where the business has an establishment. The main difference between the recognition of a foreign bankruptcy procedure as a principal procedure or as a non-principal procedure is in the direct effect of such recognition over the business\u2019s assets located in Mexico. Pursuant to the Concursos Law, if a foreign bankruptcy procedure is recognized as a principal procedure; any and all foreclosure over the business\u2019s assets, and any and all rights to transfer or grant any lien over business\u2019 assets, shall be suspended. A Mexican court shall recognize the foreign bankruptcy procedure as a non-principal procedure if the debtor has a permanent place of business outside Mexican territory, but not as a principal foreign bankruptcy procedure. The recognition aspects of a non-principal foreign bankruptcy procedure are as follows: the granting of appropriate injunctions that concede to a Mexican court to protect the business\u2019s assets or the creditors\u2019 interests, who may request through the foreign representative, that the receiver, conciliator or examiner, as the case may be: suspends all execution injunctions against the business assets; suspends the rights exercised to transmit or to mortgage the business assets, as well as to dispose of such assets in any other way; orders the delivery of evidence or the provision of information regarding the business\u2019s assets, activities, rights or liabilities of the business; entrusts the foreign representative, the receiver, conciliator or examiner, with the administration or foreclosure of all or part of the business\u2019 assets located in Mexican territory; extends every granted injunction granted by the foreign recognition procedure request; and grants any other injunction that under Mexican law may be grantable to a receiver, conciliator or examiner. Once a foreign procedure is recognized, the foreign representative will be able to ask the receiver, conciliator or examiner, to entrust, through a foreign representative, the distribution of all the business\u2019 assets located in Mexican territory. The Mexican court must make sure that the creditors\u2019 interests domiciled in Mexico are sufficiently protected so that it may decree the injunctions mentioned above. With respect to the insolvency matters, the international documents that served as basis for the current provisions of the Concursos Law are the \u201cModel Law for Cross Border Insolvency\u201d of the UNIDROIT and the \u201cEffective Insolvency Systems\u201d of the World Bank. Some of the international treaties to which Mexico is party that are related to insolvency matters are those regarding powers of attorney, judicial requests, request letters, and notifications of judicial or extrajudicial documents in civil and commercial matters.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">For EU countries only: Have there been any challenges to the recognition of English proceedings in your jurisdiction following the Brexit implementation date? If yes, please provide details.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>N\/A.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can debtors incorporated elsewhere enter into restructuring or insolvency proceedings in the jurisdiction? What are the eligibility requirements? Are there any restrictions? Which country does your jurisdiction have the most cross-border problems with?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. The eligibility requirement is to satisfy the insolvency test described above. Branches of foreign debtors may be declared in concurso, but the declaration will only cover assets and rights located and enforceable, as the case may be, in Mexican territory, and creditors for operations carried out with said branches.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are groups of companies treated on the restructuring or insolvency of one or more members of that group? Is there scope for cooperation between office holders? For EU countries only: Have there been any changes in the consideration granted to groups of companies following the transposition of Directive 2019\/1023?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The insolvency of a debtor that is part of a corporate group does not imply the insolvency of the holding company or its subsidiaries. An individual analysis of each entity shall evidence whether it is eligible to be declared in concurso. Nevertheless, debtors which are part of the same corporate group may simultaneously request the joint judicial concurso declaration, without need of estate consolidation. For the joint concurso procedure it is enough that one of the parties of the group is under the assumptions of insolvency under the Concursos Law, and that such condition places one or more of the parties forming the corporate group under the same situation. Creditors of debtors that are part of a group that meet the assumptions described above may claim the joint judicial concurso procedure. The joint judicial concurso procedure can be cumulative with other concurso procedures.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is your country considering adoption of the UNCITRAL Model Law on Enterprise Group Insolvency?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As far as we know not for the time being.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any proposed or upcoming changes to the restructuring \/ insolvency regime in your country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As far as we know not for the time being.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is your jurisdiction debtor or creditor friendly and was it always the case?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>We consider Mexico as a neutral jurisdiction. However, unlike other countries the Concurso Law requires the debtor\u00b4s approval for certain actions such as the extension of the conciliation stage or any restructuring plan. On the other hand, the Concurso Law affords substantive actions and mechanism to the creditors to overview the concurso proceeding such as the appointment of an intervenor or requesting the removing of the debtor in possession.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do sociopolitical factors give additional influence to certain stakeholders in restructurings or insolvencies in the jurisdiction (e.g. pressure around employees or pensions)? What role does the State play in relation to a distressed business (e.g. availability of state support)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The government plays an active role in special reorganizations considered as such by the Concursos Law, such as business reorganizations of debtors that provide public services pursuant to government concessions, business reorganization of credit institutions and business reorganization of auxiliary credit institutions. Special provisions govern the reorganisation of public service companies, credit institutions and bonded warehouses. These procedures shall be subject to the Concursos Law and to the specific applicable laws, regulations, and concession titles, as the case may be. The agencies responsible for overseeing such public service companies have the right to commence a case and direct the IFECOM to appoint the specialists ordinarily appointed at its discretion.<\/p>\n<p>In recent cases, post-rescue financing was granted to debtors by federal government to bring liquidity as an ongoing concern.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the greatest barriers to efficient and effective restructurings and insolvencies in the jurisdiction? Are there any proposals for reform to counter any such barriers?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>An important barrier was that in Mexico there were no specialized insolvency\/bankruptcy courts. Federal district courts were competent to hear these insolvency processes and usually were not familiarized with the particular and complicated nature of insolvency proceedings. With the recent General Decree 4\/2022 two new specialized insolvency courts were created being effective as of March 2023. We believe that these changes have been helpful and that we expect that this barrier will be tackled. We considered that the judicial power should receive further training and education on insolvency and bankruptcy matters as well as transactional issues so they are prepared to better assist companies in distress and maintain their existence to avoid that a generalized default in its payment obligations, put at risk their viability and that of those with whom they makes business.<\/p>\n<p>An additional barrier to an effective restructuring and fresh start is that the pursuant to the Conucrso Law, in a reorganization plan liability unless they are agreed they are fully discharge. There is no discharge in liquidation, and therefore is payment is not made in full liabilities survive and creditors can pursue or enforce any outstanding deficiency.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5992<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/108126","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=108126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}