MEXICO Law and Practice Contributed by: Alejandro Sainz, Gabriela Avendaño and Daniel Pardo, Sainz Abogados
the examiner reviews and audits the company’s books and records to determine whether the company satis - fies the LCM’s insolvency requirements to be eligible for concurso proceedings. The examiner may also recommend to the Bankruptcy Court the issuance of pre-emptive measures to protect the debtor’s assets and estate. A conciliator is appointed by IFECOM as ordered in the concurso judgment, who is responsible for medi - ating between the company and its creditors on the terms of a consensual plan of reorganisation, initiat - ing the formal and fully regulated process of proof of claims (by preparing a list of claims for the Bankruptcy Court and, if necessary, requesting the removal of the company from the management of the business). The conciliator is also responsible for reviewing the ordi - nary operation of the company’s business, approv - ing the expenses during the in-court proceeding, and filing various public reports before the Bankruptcy Court. Finally, the conciliator reviews the company’s accounting, books and records, and supervises any company transactions during the conciliation stage. The conciliator has the authority to resolve, among other things: (i) non-ordinary course dispositions of assets; (ii) the assumption or rejection of material contracts; and (iii) after a concurso judgment has been entered, preferred and senior financing against the estate (equivalent to debtor-in-possession (DIP) financing). If the concurso proceeding proceeds to the liquidation stage, IFECOM appoints an independent receiver, liq - uidator, or trustee ( síndico ) to operate the company in the liquidation stage. The receiver then makes public the Order for Liquidation and files a report concerning the company’s books and records, assets and bal - ance sheet. All of the company’s assets are turned over to the receiver. The receiver then takes steps to liquidate or otherwise dispose of the debtor’s assets for the highest possible price pursuant to the rules and procedures expressly provided in the Concursos Law. The proceeds are then used to provide distribu - tions to creditors in accordance with the claims and rankings set forth in the recognition judgment. The receiver follows the LCM’s strict rules of publicity and operability to guarantee the transparency of a sale
procedure and follows the guidance and forms deter - mined by IFECOM. Pursuant to the Concursos Law, an intervenor may represent the interests of creditors in the concurso procedure and oversee the actions of the conciliator or the receiver, as well as the actions of the debtor with respect to the operation of its business. Any creditor or group of creditors representing at least 10% of the value of the credits owed by the debtor, pursuant to the provisional list of credits, has the right to request the court to appoint an intervenor. The Concursos Law classifies creditors into the fol - lowing categories or classes (and with the following rankings or preferences). • First priority claims against the “estate” of the debtor ( créditos contra la masa ), which includes: (a) special labour claims under Section XXIII, Chapter A, of Article 123 of the Constitution, and applicable regulations, by increasing the wages to the corresponding two years prior to the concurso judgment (formal commencement of the concurso procedure of the debtor); (b) debt incurred for the management of the estate of the debtor with the authorisation of the 2. Creditors 2.1 Types of Creditors conciliator or the receiver, as the case may be, or those contracted directly by the conciliator; and (c) debt incurred to cover ordinary expenses for the safety and protection of the estate assets, their repairs, conservation and management. • Debt incurred from judicial or extra-judicial acts carried out for the benefit of the estate; provided, however, that per Article 225 of the Concursos Law, where this is against secured creditors, with mortgages or pledges, or creditors with special privilege, the preference or privilege of the claims against the estate would not apply, except for the following claims: (a) the special labour claims under the Constitu - tion referred to above; (b) the litigation expenses incurred in the defence
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