Mexico recently amended its governing insolvency, the Ley de
Concursos Mercantiles (LCM). The changes were largely an
improvement although there is at least one troublesome new
provision.
The impetus for the amendments was the accumulation of
experience under the LCM, first enacted in 2000 and then amended in
2007, including in the cross-border context the notorious Vitro
case involving affiliate debt.
Some of the key changes are:
- First, the law introduces the concept of a statutory
"subordinated creditor." "Subordinated
creditor" is defined in Article 222 to include an unsecured
creditor who has the same board members as does the debtor, or who
is controlled by the debtor or is controlled by another entity that
controls the debtor. Article 157 provides that if
"subordinated creditors" hold at least 25 percent of the
total of all allowed unsecured claims, including the claims of the
"subordinated creditors," then such subordinated creditor
claims are not
