MEXICO Law and Practice Contributed by: Alejandro Sainz, Gabriela Avendaño and Daniel Pardo, Sainz Abogados
6.4 Recognition and Enforceability The LCM provides for domestic recognition and enforcement of only two types of “foreign proceed - ings”: foreign “main” proceedings and foreign “non- main” proceedings: • as a main proceeding, when the foreign proceeding is brought to a court with jurisdiction in the place where the business has its main place of interest; or • as a non-main proceeding, when the foreign pro - ceeding is brought to a court with jurisdiction in the place where the business has an establishment. The main difference between the two lies in the direct effect of such recognition over the business’s assets located in Mexico. If a foreign bankruptcy procedure is recognised as a main proceeding, then any and all foreclosure over the business’s assets, and any and all rights to transfer or grant any lien over the business’s assets, shall be suspended. The Bankruptcy Court shall recognise the foreign bankruptcy procedure as a non-main proceed - ing if the debtor has a permanent place of business outside Mexican territory, but not as a principal foreign bankruptcy procedure. Procedure The recognition aspects of a foreign non-main pro - ceeding are as follows: • appropriate injunctions – which may be requested through the foreign representative, the receiver, conciliator or examiner, as the case may be – that concede the right to protect the business’s assets or the creditors’ interests to a Mexican court are granted; • all execution injunctions against the business’s assets are suspended, as are the rights exercised to transmit or to mortgage the business’s assets or to dispose of such assets in any other way; • the delivery of evidence or the provision of infor - mation regarding the business’ assets, activities, rights, or liabilities is ordered; • the foreign representative, the receiver, conciliator or examiner is entrusted with the administration or
foreclosure of all or part of the business’s assets located in Mexican territory; and • every injunction granted by the foreign recogni - tion procedure request is extended and any other injunction that under Mexican law may be grant - able to a receiver, conciliator or examiner are granted. Upon the recognition of a foreign proceeding, the for - eign representative will be able to ask the receiver, conciliator or examiner to entrust, through a foreign representative, the distribution of all the business’s assets located in Mexican territory. The Mexican court must make sure that the creditors’ interests domiciled in Mexico are sufficiently protected so that it may decree the injunctions outlined above. The LCM contains a special provision in its domes - tic legislation on cross-border insolvency, in Article 293, which places a unique obstacle on a foreign proceeding that seeks recognition in Mexico. Article 293 requires that, in order for a debtor that has an “establishment” in Mexico to request recognition of a foreign proceeding in a Mexican Bankruptcy Court, the provisions of Chapter IV of Title 1 of the LCM gov - erning the initiation of a concurso proceeding apply. The consequence of this unique provision in the LCM is that, when a foreign insolvency proceeding seeks recognition in Mexico for an entity that has an estab - lishment in Mexico, a concurso proceeding is opened, not an ancillary proceeding. 6.5 Co-Ordination in Cross-Border Cases The co-ordination and co-operation contemplated under Articles 304 and 305 of the LCM concern co- operation in the case of parallel proceedings, where there are bankruptcy cases pending in multiple juris - dictions. Article 304 requires Mexican bankruptcy judges, inspectors, conciliators and liquidators to “co-operate to the extent possible with foreign courts and repre - sentatives”. Article 305 provides the means through which the co-operation referenced in Article 304 may be “put into practice”, including but not limited to: (i) the appointment of a person to act under the direction of the judge, the bankruptcy conciliator, the inspector, or the liquidator; (ii) the communication of informa -
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