MEXICO Law and Practice Contributed by: Alejandro Sainz, Gabriela Avendaño and Daniel Pardo, Sainz Abogados
• request the commencement of the commercial bankruptcy (either in the ordinary way starting with a conciliation – reorganisation – or in the bankrupt - cy-stage liquidation); • request the recognition of their credit or modify the manner in which it is accounted for by the debtor; • request that their credit be evaluated according to the corresponding ranking and priority sequence; • participate in the restructuring agreement nego - tiations with the bankruptcy conciliator and the debtor; • request the avoidance of the disastrous acts committed by the debtor during the insolvency’s retroactive period; • request that the conciliator determine whether the outstanding contracts must be executed or con - tinue in effect; • appoint auditors to oversee the insolvency repre - sentatives, often known as “specialists” in the LCM (conciliator and liquidator); • use the necessary resources to challenge decisions made by the judge presiding over the proceeding; and • participate in spill-over payments based on their priority. 4.3 The End of the Restructuring, Rehabilitation and Reorganisation Procedure The conciliation stage ends upon (i) an agreement among the company and a majority of its creditors for a consensual restructuring approved by the Bank - ruptcy Court in the form of a Plan of Reorganisation of concurso agreement ( convenio concursal ); (ii) the expiration of the term limit set forth above, at which time the concurso proceeding will move to the liquida - tion stage; (iii) the request of the conciliator and the Bankruptcy Court’s approval of such request; (iv) the company’s request; or (v) the creditors’ request and the company’s acceptance. In the case of (ii) through to (v), the company enters the liquidation stage ( quiebra ) of the Concurso Mercantil following the Bankruptcy Court’s entry of a formal judgment for liquidation (the “Liquidation Judgment”). To be effective, the reorganisation agreement shall be subscribed by the debtor and the recognised or
acknowledged creditors representing over 50% of the sum of: • the amount recognised to the totality of the recog - nised or acknowledged unsecured and subordi - nated creditors; and • the amount recognised to those recognised or acknowledged secured creditors or those with special privilege subscribing to the reorganisation agreement. Should the subordinated (intercompany) creditors rep - resent more than 25% of all the acknowledged loans, the majority of the remaining common creditors will vote on the restructuring agreement without consider - ing the subordinated creditors. Secured creditors cannot be impaired without their consent; however, they may choose to participate in a reorganisation plan and exercise their voting rights. While the Concursos Law does not explicitly outline a procedure for cramming down dissenting credi - tors, it does allow for a reorganisation agreement that includes measures such as haircuts or maturity extensions to be imposed on unsecured creditors, provided that at least 30% of the unsecured creditor class accepts the same terms. This mechanism offers a path for restructuring agreements to move forward even in the absence of unanimous support from unse - cured creditors. The Concursos Law allows the debtor to enter into a new insolvency proceeding if it fails to meet the obli - gations under the reorganisation plan or, in excep - tional circumstances, to request a modification of the reorganisation plan’s terms.
4.4 The Position of the Debtor in Restructuring, Rehabilitation and Reorganisation
The debtor may continue to operate its business and usually retains management of it, unless the concilia - tor requests the court to remove the debtors’ manage - ment in order to protect the pool of assets. If the debtor retains management, the conciliator shall:
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