MEXICO Law and Practice Contributed by: Alejandro Sainz, Gabriela Avendaño and Daniel Pardo, Sainz Abogados
• supervise the accounting and all transactions per - formed by the debtor; • decide if any existing agreements binding on the debtor must be terminated; • approve, with the prior opinion of the interveners appointed by the creditors, any new credit in favour of the debtor, the creation of new security interests, the substitution of any existing security interests, or the sale of any assets not involved in the ordinary course of business of the debtor; and • call the board to discuss and approve matters relating to the debtor’s business. In the event the debtor is removed from the man - agement of its business, the conciliator will become the administrator and will be granted full authority to conduct the business, on the understanding that the authorities of the debtor and its decision-making com - mittees shall cease. The conciliator may also request that the court suspend the debtor’s operations if the pool of assets or an increase in the debtor’s liabilities is at risk. The court and the conciliator are authorised to adopt measures to safeguard assets of the debtor for the benefit of the creditors and ensure that no actions are taken outside the ordinary course of business. The debtor is required to honour all pending contracts and comply with their terms and conditions. However, the conciliator has the authority to reject executory contracts if doing so improves the prospects of reha - bilitation and maximises recovery for creditors. This discretionary power allows the conciliator to prioritise the financial restructuring and overall interests of the creditor body during the insolvency process. Subject to the judge and conciliator’s approval, debt - ors may obtain financing while in insolvency, to pre - serve the ordinary course of business and to provide the required liquidity during the procedure, by follow - ing certain rules provided under the Concursos Law. Any 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 a claim against the estate of the debtor and has preference over common creditors, aiming to preserve the ordinary course of business by providing
the required liquidity during the procedure. However, unlike other jurisdictions, in Mexico the DIP financing does not have preference over already secured credi - tors. The new rules include possible loans with prior - ity liens but without affecting existing priority secured creditors. 4.5 The Position of Office Holders in Restructuring, Rehabilitation and Reorganisation Please see 1.3 Statutory Officers . 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and The only claims explicitly recognised as secured under Mexican law are those backed by mortgages or pledge interests. However, if a concurso procedure has been admit - ted by the court, then the creditors will be prevented from foreclosing on the collateral or disposing of the 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’ actions seeking the enforcement of collateral, or the seizure or attachment of a debtor’s assets. Upon the insolvency declaration by the competent court, a stay is imposed on the enforcement of the creditors’ rights (including secured creditors) and remains in force throughout the conciliation stage. Reorganisation Secured Claims See 4.3 The End of the Restructuring, Rehabilita- tion and Reorganisation Procedure for discussion of cram-down. Unsecured Claims Debt Once in a concurso proceeding, unsecured debt is subject to some special rules, it being noted that only the following may be subject to a set-off after the con- curso judgment. • Any amounts arising from rights and obligations of the debtor and third parties that became due
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