Recent Restructuring Reforms in the Region: Mexico

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Reforms in regard to insolvency proceedings, which are governed by the Insolvency Law,[2] have been modest. Since the last key revisions made in 2014, meaningful reform is lacking, notwithstanding that formal insolvency proceedings (concurso mercantil) continue to be unreliable for any corporation irrespective of its size measured by assets or liabilities. Large restructuring cases continue to be much more successfully addressed through out-of-court negotiations and agreements or, in more recent complex cases, through Chapter 11 filings in the United States (although this alternative may not be always available, depending on the nature of the corporation’s debt structure, the status of its tax and labour liabilities and other relevant factors, such as being in a regulated industry or subject to a government concession). Yet in 2021 and 2022, several large Mexico-based corporations turned north successfully – with the exception of one retailer – to restructure their finances.[3]

As has often been pointed out in the past, cases have stalled amid daunting formalities, creative delaying tactics and a growing litigious environment fuelled by challenges to the growing practice relating to the request for and granting of wide-ranging pre-petition precautionary measures. Pitfalls arising from expanding interpretations of due process and human rights are not uncommon. Other than in the few cases of filings under a pre-packaged plan (plan de reestructura previo) implemented through a concurso, the otherwise ‘mandatory’ time frames established in the Insolvency Law have been largely ignored. In addition, influence peddling has on occasions become prevalent and the independence of the Federal Judiciary has often been questioned.

Developments arising from the covid-19 pandemic

The only covid-19-related legal initiative worth mentioning was a proposed amendment, allegedly supported by the principal Mexican Bar Association, to alleviate the tardiness of the concurso proceeding in extraordinary circumstances, such as a pandemic (the Initiative).

The intention of the Initiative was to accelerate insolvency proceedings given the extraordinary emergency affecting the commercial, business and jurisdictional environments. With good reason, the Initiative recognised that there are industries and sectors of the economy that practically came to a halt, resulting in significant financial damage.

The Initiative included provisions permitting any company, irrespective of its size, to file for a concurso mercantil on a fast-track basis, as a tool to keep it in operation through an expedited procedure that could significantly limit the time and formalities of the process. The emergency insolvency regime, according to the Initiative, would apply to the extent that an unforeseen material adverse effect or a force majeure event, or a declaration of emergency, sanitary contingency or natural disaster, at a regional or national level, aggravates the economic situation of the country or region, affecting individuals or legal entities. The application of the emergency insolvency regime presented by the Initiative was intended to be available for as long as any such emergency were to subsist, and for up to six months thereafter.

Notwithstanding the simplicity it sought, the Initiative was inconsistent with the rule of law, given its failure to include basic legal definitions, leaving debtors and creditors with little assurance of legal protection as it prohibited appeals. The Initiative left open many questions regarding the emergency proceeding and its consistency with traditional notions of procedural due process embedded in Mexican law and jurisprudence. Furthermore, the attempted removal of several principles set forth in the Federal Tax Code would seem to materially affect the statutory preferences and the collection efforts of the federal tax authorities.

Congress never discussed the Initiative as it did not make it to the floor, and it probably never will.

A recent development

The Supreme Court of Mexico and the Council of the Federal Judiciary have shown only sporadic interest in attending to the evident regression of concurso mercantil. One of the recurring issues has been the lack of specialist insolvency courts, which has contributed to a state of uncertainty as to the outcome of cases, for debtors and creditors alike, in addition to the notorious lack of adherence to the ‘mandatory’ periods by the federal courts as required by the Insolvency Law.

A welcome recent development is that the Federal Judiciary, through the Council of the Federal Judiciary, issued a mandatory resolution in February 2022, pursuant to which a First and Second District Court were created, with exclusive jurisdiction in respect of any concurso mercantil nationwide. Although each of the two district court appointees are not particularly recognised for their expertise in concurso mercantil matters, each has shown an initial enthusiasm to tackle complex issues and each has been supported by specialist courses organised through the Council of the Federal Judiciary, imparted by many of the leading restructuring professionals and litigators of Mexico.

The two specialist insolvency district courts moved diligently to initiate their activities in March 2022. The federal courts were mandated to submit all concurso mercantil cases pending admission as well as related appeals that were filed between November 2020 and March 2022 to the newly created courts. Not surprisingly, the number of pending cases was not significant, and so the new courts do not seem to be overburdened by the volume or complexity of cases. It is noted that, in particular, the First District Court for concurso mercantil is starting out with timely and transparent rulings. Hopefully, concurso mercantil may eventually become a reliable tool to effect financial restructurings.

In addition, the Federal Institute of Insolvency Specialists[4] has issued guidelines as to the supervision of such specialists and, for the first time, a code of conduct. These are steps in the right direction if the provisions contained in the guidelines are adhered to.


There is hope that with the recent creation of specialist insolvency courts, the need to revise the ageing Insolvency Law, and many of its impractical provisions, will gain momentum. The main issue, however, is that the current administration and Congress, dominated by the ruling party of the president, do not seem to have an interest in or otherwise any priority regarding concurso mercantil, but rather are focusing on ensuring control of each of the powers of government, now and for the immediate future, to pursue their agenda.


[1] Thomas S Heather is of counsel and Christian Dorantes Picazo is an associate at Creel, García-Cuéllar, Aiza y Enriquez, SC.

[2] Ley de Concursos Mercantiles, enacted in May 2000 and amended in 2007 and 2014, with minor amendments in 2019 and 2020.

[3] Most notably, Grupo Aeroméxico, S.A.B. de C.V., et al. (airlines), Case No. 20-11563 (SCC) (jointly administered S.D.N.Y.); Cinemex Holdings USA, INC., et al., Case No. 20-14695-LMI, Southern District of Florida (jointly administered); Grupo Famsa, S.A.B. de C.V. (retail), Case No. 20-11505 (SCC); and Alpha Management, LLC et al., Case No. 21-11109 (JKS), Delaware S.D.N.Y.

[4] The Federal Institute of Insolvency Specialists, known as the IFECOM, is an agency of the Federal Judiciary entrusted with the oversight of professionals appointed to support insolvency procedures (such as inspectors, trustees and liquidators – all of whom for the time being are individuals and not corporate entities), and to coordinate their efforts and provide continuing education.

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