MEXICO Law and Practice Contributed by: Alejandro Stamoglou, Jesús Pérez Alcántar and Julio Jiménez Manrique, Bello, Gallardo, Bonequi y García, S.C.
7.6 Transactions Voidable Upon Insolvency Under Mexican law, transactions carried out by the debtor prior to the insolvency declaration may be deemed fraudulent and therefore ineffective if they were intended to defraud creditors and the counter - party was aware of such fraud.
7.8 Out-of-Court v In-Court Enforcement As explained in 7.4 Rescue or Reorganisation Pro- cedures Other Than Insolvency , out-of-court restruc - turings in Mexico typically involve direct negotiations between debtors and creditors to restructure debt, extend payment terms, or agree on standstill arrange - ments. These are voluntary mechanisms that lack the legal protections of formal insolvency proceedings (such as an automatic stay), so their success depends on creditor co-operation and the debtor’s ability to present a viable turnaround plan. Co-operation from existing equity holders may be required when the restructuring involves changes to the capital structure, such as debt-to-equity conver - sions, new capital injections, or acceptance of dilu - tion. Other constituencies, such as guarantors or related parties, may also need to consent to amend - ments in contractual obligations. In contrast, in-court processes provide significant advantages, including the automatic stay that halts enforcement actions, the ability to bind dissenting creditors under a court-approved plan, and the pos - sibility to acquire collateral free and clear of other claims. These proceedings offer greater legal certainty and enforceability, although they are typically more time-consuming and procedurally complex than out- of-court solutions. 7.9 Dissenting Lenders and Non-Consensual Restructurings Mexican law grants dissenting creditors several rights during insolvency proceedings. They may oppose certain acts declared during the process and appeal judicial decisions, such as the judgment on recogni - tion, ranking, and priority of claims. While there is no out-of-court mechanism to force a non-consensual restructuring, in-court proceedings allow a restructur - ing plan approved by the required majority to bind dissenting creditors. 7.10 Expedited Restructurings In Mexico, there is no formal statutory framework for expedited restructurings such as pre-packaged or pre-arranged plans comparable to those in jurisdic - tions like the US. However, similar outcomes can be achieved through private agreements negotiated in advance with creditors and then incorporated into an insolvency proceeding.
Examples include: • gratuitous acts;
• transactions where the debtor pays a considera - tion significantly higher or receives one significantly lower than market value; • transactions with terms or conditions that materi - ally deviate from prevailing market conditions at the time of execution; Additionally, certain acts are presumed fraudulent if performed during the look-back period ( fecha de retroacción ) unless the interested party proves good faith, such as: • granting new security or increasing existing securi - ty when the original obligation did not contemplate such changes; and • payments made in kind when different from the originally agreed form or when the agreed consid - • debt forgiveness by the debtor; and • payments of obligations not yet due. Under Mexican law, as of the date the insolvency judgment is issued, set-off is only permitted in the following cases: • rights and obligations of the debtor arising from the same transaction, provided such transaction is not interrupted by the insolvency judgment; • rights and obligations that matured prior to the insolvency judgment and whose set-off is express - ly allowed by law; • rights and obligations arising from derivative finan - cial transactions; and • tax credits in favour of and against the debtor. eration was in cash. 7.7 Set-Off Rights
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