MEXICO Law and Practice Contributed by: Alejandro Sainz, Gabriela Avendaño and Daniel Pardo, Sainz Abogados
or recovery of the goods or assets subject to the security interest of the secured claims or over those assets related to the “special privi - lege”; and (c) the expenses necessary for the repair, conser - vation and sale of those assets. • Singularly privileged creditors. • Secured creditors (with mortgages and pledges over assets of the debtor) and tax claims secured with a security in rem (up to the value of such guar - antee) are paid first with proceeds from the sale of mortgaged or pledged item. If the items have a value or a price in excess of the debt, any such excess or remaining value is directed to cover sub - sequent debt payments to other creditors. If the price does not cover the debt, mortgage or pledge, the corresponding creditor may participate, pro rata, as a common or unsecured creditor, to collect the remaining amount). • Other tax claims and labour claims. • Creditors with a special privilege (ie, those with a guarantee trust). • Common or unsecured creditors (trade creditors would usually rank as unsecured creditors and there are no particular mechanisms to secure their unpaid debts by statute). • Subordinated creditors (intercompany claims). 2.2 Priority Claims in Restructuring and Insolvency Proceedings DIP Financing The LCM permits a debtor to incur both unsecured and secured debt in the ordinary course of business. If the credit is approved by the court or the concilia - tor, as applicable, it grants the lender a priority claim or a lien on the debtor’s unencumbered assets or a second-priority claim on encumbered assets. DIP loans hold a priority claim in insolvency proceed - ings, except for certain labour, tax and secured claims. Pre-existing liens held by secured creditors cannot be used to secure new financing unless authorised by the affected secured creditors. First Priority Claims First priority claims against the “estate” of the debtor ( créditos contra la masa ) include:
• special labour claims under Section XXIII, Chapter A, of Article 123 of the Constitution, and applicable regulations, by increasing the wages to the corre - sponding two years prior to the concurso judgment (formal commencement of the concurso procedure of the debtor); • debt incurred for the management of the estate of the debtor with the authorisation of the concili - ator or the receiver, as the case may be, or those contracted directly by the conciliator; and • debt incurred to cover ordinary expenses for the safety and protection of the estate assets, their repairs, conservation and management. Administration Expenses Administration expenses are debts incurred from judi - cial or extra-judicial acts carried out for the benefit of the estate. These debts are generally privileged but, under Article 225 of the Concursos Law, where they are in conflict with secured creditors with mortgages or pledges, or creditors with special privilege, the pref - erence or privilege of administrative expense claims against the estate would not apply, except for in the following circumstances: • the special labour claims referred to in the first bul - let point in the First Priority Claims list above; • litigation expenses incurred for the defence or recovery of the goods or assets subject to the security interest of the secured claims or over those assets related to the “special privilege”; and • the expenses necessary for the repair, conservation The most common security for immovable property is the mortgage, which is governed by state law. This security is required to be documented in a notarial instrument and must comply with the publicity prin - ciple in its registration so that it may be enforceable against third parties. Depending on the asset granted as collateral, there are some cases where additional registration is required (with the Federal Telecommu - nication Registry, Maritime Registry, etc). The most common securities for movable or intangible assets are floating lien pledges, governed by federal and sale of those assets. 2.3 Secured Creditors Common Forms of Security
343 CHAMBERS.COM
Powered by FlippingBook