Bankruptcy and Corporate Restructurings in Mexico: Recent

Transcription

A GENDA
International creditors and investors face significant challenges in Mexican distressed situations and
bankruptcies. The new bankruptcy legislation addresses many but not all creditor concerns. Some of the
questions that we will explore in this tightly structured seminar that you can’t afford to miss include:
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Are creditors afforded the same protections as in other jurisdictions?
How do controlling shareholders fare under the new regime?
How safe is the Mexican fideicomiso structure against attack?
Are there opportunities to purchase distressed assets out of bankruptcy?
Are there risks of jurisdictional battles or forum-shopping?
When should a Mexican debtor consider Chapter 11?
Are DIP financings possible in a Mexican concurso?
Are “pre-packaged” plans feasible in Mexico?
Can the debtor assume or reject executory contracts?
Opening Remarks
8:45 – 9:00 am
J. Allen Miller
Head of Corporate Department and Co-Head of
Latin America Practice Group, Chadbourne & Parke LLP
Panel
9:00 – 10:30 am
Moderator
Marc Rossell
Partner, Chadbourne & Parke LLP
Dr. Luis Manuel C. Méjan Carrer
General Director, Instituto Federal de Especialistas
De Concursos Mercantiles
Howard Seife
Partner, Chadbourne & Parke LLP
Martin Lewis
Managing Director, Greenhill & Co. Inc.
Boris Otto
Partner, Chadbourne & Parke, S.C.
Luis Enrique Graham
Partner, Chadbourne & Parke S.C.
José María Abascal
Partner, Abascal Abogados, S.C.
Biographies
J OSÉ M ARÍA A BASCAL
PARTNER, ABASCAL ABOGADOS, S.C.
José María Abascal is a partner at Abascal & Asociados, and currently acts as
counsel or arbitrator.
He has been counsel or arbitrator in arbitrations in Mexico, the United States,
Latin America and Europe, under, inter alia, the ICC, the ICDR, UNCITRAL, CIAC,
CANACO, Panama Chamber of Commerce Rules and ad hoc arbitrations.
Mr Abascal is the chairman of the Mediation and Arbitration Commission of the
National Chamber of Commerce of Mexico City (CANACO). He is a member of the
American Arbitration Association’s board, its executive committee and the
international advisory committee (in 2006 he received the Outstanding Director
Award). Mr Abascal is vice president of the Institute for Transnational Arbitration,
and is chairman of the insolvency committee of the Mexican Bar.
He was commissioner of the UNCC, Panel E2 (corporate and other entities claims),
that adjudicated corporate claims against Iraq for the invasion and occupation of
Kuwait and the Gulf War (from 1996 to 2003).
He was chairman of the UNCITRAL Working Group in Arbitration (from 2000 to
2006), which drafted the UNCITRAL Model Law in International Commercial
Conciliation, the recent amendment of the UNCITRAL Model Law on International
Arbitration and a recommendation on the interpretation of the New York
Convention. Chaired the respective committees of the hall, in the UNCITRAL
plenary meetings that adopted those instruments. Mr Abascal chaired all the
travaux préparatoires of the UNCITRAL Model Law on Electronic Commerce.
Mr Abascal was a court member of the LCIA (from 2003 to 2008), vice president of
the Mexican Bar (2001), chairman of the trade law committee (from 1991 to 1998)
and chairman of the ethics commission of the Mexican Bar (from 2002 to 2003).
He is emeritus professor of the Ibero-American University of Mexico City, and has
written numerous publications.
Mr Abascal speaks English, French and Spanish.
D R . L UIS M ANUEL C. M ÉJAN C ARRER
GENERAL DIRECTOR, INSTITUTO FEDERAL DE ESPECIALISTAS DE CONCURSOS MERCANTILES
Dr. Luis Manuel Méjan is currently the head of the IFECOM.
He obtained his law degree from the Universidad Autónoma de Guadalajara and
his PhD from UNAM. He is president of the International Association of Insolvency
Regulators, he is a member of the Mexican Bar Association, member of the
International Insolvency Institute and of the Instituto Iberoamericano de Derecho
Concursal.
He has been speaker in several conferences and usually writes articles for
important publications.
M ARTIN L EWIS
MANAGING DIRECTOR, GREENHILL & CO. INC.
Mr. Lewis joined Greenhill in 2007. Most recently Martin headed the restructuring
practice for Rhone Group and prior to that was a founding member of Miller
Buckfire Lewis & Co. and a Managing Director at the Blackstone Group. He
specializes in representing companies and creditors in large complex
restructurings and bankruptcy cases.
H OWARD S EIFE
PARTNER
30 Rockefeller Plaza
New York, NY 10112
United States of America
tel +1 (212) 408-5361
fax +1 (646) 710-5361
email [email protected]
online www.chadbourne.com/hseife
Practice Description
Practice Areas
Bankruptcy and Financial
Restructuring
Regions
North America
United States
Admissions
1979 New York
1980 U.S.D.C. - E.D.N.Y.
1980 U.S.D.C. - S.D.N.Y.
1982 U.S. Ct. App. - 2nd Cir.
1999 U.S. Ct. App. - 9th Cir.
1985 U.S. Ct. Fed. Cl.
2001 U.S. Sup. Ct.
Languages
English
Howard Seife, global chair of the Firm’s bankruptcy and financial restructuring
practice, has represented clients in reorganizations, both domestically and
internationally, of retail, technology, energy, insurance, real estate, leasing,
textiles, manufacturing, telecommunications and media companies. He has dealt
with virtually every bankruptcy and restructuring situation and is a leader in the
use of cross-border ancillary proceedings.
Representative Matters
• Counseled the Chapter 11 creditors’ committee in Tribune, Spiegel, Inc./Eddie
Bauer Inc.; Parmalat USA Corp.; Metromedia Fiber Network; New York Daily
News (Maxwell Newspapers, Inc.); New York Post; and Pocket Communications.
• Representing the receiver appointed in the Russian bankruptcy proceedings of
Yukos Oil Company in the first major test of Chapter 15 of the Bankruptcy Code.
• Representing the ad hoc committee of swap counterparties in the restructuring
of the monoline insurance company, ACA Financial Guaranty.
• Represented a number of the largest creditor banks and insurance companies
in Enron Corporation’s Chapter 11 and some of the largest creditors and account
holders in the Lehman Brothers and Refco Chapter 11s.
• Advised multiple companies in cross-border insolvency issues, including the
European bank group in the Lernout & Hauspie/Dictaphone cases.
• Served as debtor’s counsel in the successful reorganization of ATC Group
Services.
• Represented Sabena Airlines in its ancillary bankruptcy proceeding.
• Represents Ernst & Young as the Australian and Bermudian liquidators in the
insurance insolvency of New Cap Reinsurance Corporation Ltd.
• Represents PricewaterhouseCoopers as provisional liquidators for Independent
Insurance Company, Folksam International Insurance Company Ltd., and Black
Sea & Baltic General Insurance Company Ltd.
• Represents KPMG as provisional liquidator for Manhattan Investment Fund
and Belvedere Insurance.
• Represented the reinsurer Hopewell International in its ground breaking
ancillary bankruptcy where, after an eight-day trial, a U.S. court for the first
time recognized and enforced the terms of a scheme of arrangement for a
solvent company.
Honors
Mr. Seife’s role as a leader in the innovative use of ancillary bankruptcy
H OWAR D S EIF E
proceedings was recently recognized by The Deal’s Bankruptcy Insider, describing him as “the top-ranked
U.S. lawyer to foreign debtors.” He was cited in Chambers USA - America’s Leading Lawyers for Business (2008)
for his work in bankruptcy/restructuring and in New York Super Lawyers (2008) in the areas of bankruptcy
and creditor/debtor rights. Mr. Seife was also cited in The Legal 500 for corporate restructuring.
Activities and Affiliations
Mr. Seife is frequently invited to comment on bankruptcy issues on national media networks such as CNN,
CNBC, Bloomberg, and PBS and on National Public Radio and is often quoted in The New York Times and The
Wall Street Journal.
• Member: International Insolvency Institute – an invitation-only organization of leading insolvency
professionals, judges and academics
• Member of the Board of Directors of INSOL International (2007 - )
• Co-Chair, Group of Thirty-Six Committee, INSOL International, 2007
• Chair, American Bankruptcy Institute (ABI), International Insolvency Symposium, panel on new Chapter
15 of the Bankruptcy Code, London, 2006
• Program Chair, INSOL Annual Americas Conference, Scottsdale, 2006
• Chair, INSOL International’s Asian Conference, panel on cross-border insolvency, Beijing, October 2002
• Chair, INSOL International, Technical Research Committee, 2003-2005
• Mediator for the Bankruptcy Court, Southern District of New York, 1996-present
• Arbitrator for the United States District Court, Eastern District of New York, 1985-present
Publications
• “U.S. Courts Should Continue to Grant Recognition to Schemes of Arrangement of Solvent Insurance
Companies,” Norton Journal of Bankruptcy Law and Practice, August 2008
• “Trustee’s Fraud Claims May Be Barred by ‘In Pari Delicto’ Doctrine,” Banking Law Journal,
November/December 2006
• “Creditors’ Committees Sharing Information: How Much is Enough?,” Banking Law Journal, April 2006
• “The ‘Deepening Insolvency’ Debate,” Banking Law Journal, July 2005
• “New Chapter 15 to Replace Section 304,” Pratt’s Guide to The Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, June 2005
• “U.S. Bankruptcy Code Amendments Affect Ancillary Proceedings: Chapter 15 to Replace Section 304,”
Client Alert, May 9, 2005
• “Employee Entitlements in the United States,” INSOL International, March 2005
• “Solvent Debtors May be Unable to Enter Bankruptcy in Absence of ‘Financial Distress,” Banking Law
Journal, January 2005
• “Silent Second Liens,” Banking Law Journal, October 2004
• “As Latin American Cross-Border Insolvencies Increase, So Do the Questions of Law,” The Americas
Restructuring and Insolvency Guide, July 2004
• “Valuing a Chapter 11 Debtor for Plan Confirmation,” Banking Law Journal, June 2004
• “A Foreign Debtor in a U.S. Bankruptcy Court: Will the Case Be Dismissed?,” Banking Law Journal, April
2004
• “Courts Divided on Debtors’ Payments to ‘Critical Vendors’ on Entering Chapter 11,” The Banking Law
Journal, July 2003
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H OWAR D S EIF E
• “Discovery in the United States: What Devices are Available to Assist Foreign Insolvency Proceedings?,”
Insolvency Intelligence, June 2003
• “Delaware Bankruptcy Court’s Rulings Threaten Use of ‘Lockup Agreements’ in Prenegotiated and
Prepackaged Plans,” The Banking Law Journal, May 2003
• “Insurance Proceeds in Bankruptcy,” Banking Law Journal, September 2002
• “Bondholders, Now Active in U.S. Corporate Restructurings, May Take More Significant Role in the U.K.,”
The European Restructuring and Insolvency Guide, April 2002
• Cross-Frontier Insolvency of Insurance Companies, (co-author and editor), Sweet & Maxwell, 2001
Speeches and Events
• Biofuel Survival Strategies for a Challenging Market, New York, New York, March 2, 2009
• Bankruptcy and Corporate Restructurings in Mexico: Recent Experiences and the Road Ahead, New York,
New York, February 6, 2009
• The Global Financial Crisis: Legal And Business Implications, Mexico, December 3, 2008
• Webinar on Legal Issues Arising from the Financial Crisis of 2008, October 30, 2008
• National Conference of Bankruptcy Judges: Judicial Co-Operation in Multi Jurisdictional Insolvencies,
Scottsdale, AZ, September 27, 2008
• “Impact of Credit Derivatives on Corporate Restructurings,” Shanghai, People’s Republic of China,
September 16, 2008
• “Exploring the US Exit Strategies Landscape,” London, United Kingdom, June 2008
• “The Future of Solvent Schemes and Part VII Transfers,” Arlington, VA, January 2008
• The Coming Wave . . . What the Turmoil in the Credit Markets Means — and What to Expect in 2008, New
York, NY, October 24, 2007
• One Year On: Key Issues and Developments in the First Year of the 2005 Bankruptcy Code Amendments,
New York, NY, October 17, 2006
• INSOL Scottsdale: Cross-Border Insolvency: Cooperation or Conflict?, Scottsdale, AZ, May 21-24, 2006
• Cross-Border Issues, New York, NY, September 21, 2005
Education
Union College, B.A., cum laude, 1973
Georgetown University Law Center, J.D., cum laude, 1978
London School of Economics and Political Science, LL.M., 1983
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D AVID M. L E M AY
PARTNER
New York, NY 10112
tel +1 (212) 408-5112
fax +1 (646) 710-5112
online www.chadbourne.com/dlemay
Practice Areas
Restructuring
Regions
North America
United States
Admissions
1982 New York
David LeMay has practiced in the bankruptcy and insolvency area for over 20
years. He also has substantial experience in general corporate, securities and
transactional matters. He represents Chapter 11 creditors’ committees, debtors
and other parties with interests in bankruptcy and insolvency situations. He has
substantial experience in formulating and litigating plans of reorganization,
debtor in possession financings, cash collateral orders and stay relief matters,
lease and license disputes in bankruptcy cases, and going-out-of-business retail
store closing programs. He has handled numerous insolvency matters in retailing,
the media industry (publishing, newspapers, film, video, broadcast and cable
television, and related technologies) and in the commercial aviation industry.
• Currently representing the creditors committee of Tribune Company.
Languages
English
• Currently representing numerous account holders, counterparties, and other
creditors in the Lehman Brothers bankruptcy cases and related SIPA
proceedings.
• Represented creditors’ committees in Parmalat USA Corp., Spiegel, Inc.,
Metromedia Fiber Network, Inc., Sher Distributing Company, Wallace’s
Bookstores, Crown Books, Learningsmith, Lauriat’s and Golden-Lee Book
Distributors cases.
• Represented account holders with approximately $500 million of exposure in
the Refco, Inc. et al. Chapter 11 cases.
• Represented the ad hoc committee of swap counterparties in the restructuring
of the monoline insurance company, ACA Financial Guaranty.
• Represented a major global financial institution in the Northwest Airlines
Chapter 11 cases.
• Represented lenders and potential asset acquirers in the Enron Chapter 11
case.
• Represented key creditor in the Advanced Marketing Services, Inc. Chapter 11
case.
• Represented Acme Metals and Continental Airlines as Chapter 11 debtors.
• Served as principal bankruptcy counsel for Isetan Company Ltd. in the
protracted Chapter 11 case of Barney’s, Inc.
Honors
Mr. LeMay is cited in New York Super Lawyers (2006, 2007 and 2008) in the area of
bankruptcy law and creditor/debtor rights.
D AVID M. L E M AY
Mr. LeMay is a member of the Committee on Bankruptcy and Corporate Reorganization of the Association of
the Bar of the City of New York.
Publications
• "Recent Decision Puts Added Disclosure Pressure on Unofficial Committees," International Restructuring
NewsWire, (co-author), September 2007
• "BAPCPA: Review and Analysis of Business Bankruptcy Provisions After One Year," (co-author), Pratt's
Journal of Bankruptcy Law, January/February 2007
• "District Court Decision Negates Bank Guarantees Granted by Fortune 500 Affiliates," Client Alert,
November 29, 2004
Education
Dartmouth College, A.B., summa cum laude, 1978
University of Michigan Law School, J.D., 1981
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J OSEPH H. S MOLINSKY
PARTNER
New York, NY 10112
tel +1 (212) 408-5489
fax +1 (646) 710-5489
online www.chadbourne.com/jsmolinsky
Joseph Smolinsky provides restructuring advice and strategy to borrowers,
lenders, investors and creditors and also represents corporations seeking to
reorganize under Chapter 11.
Practice Areas
Restructuring
Finance
Private Funds
Project Finance Workout and
Restructuring
Industries
Consumer Products
Food and Beverages
Regions
North America
United States
Admissions
1988 Connecticut
1989 New York
1990 U.S.D.C. - E.D.N.Y.
1990 U.S.D.C. - S.D.N.Y.
Languages
English
• Significant debtor representations include Harvard Industries, Inc., Jazztel plc,
Magnesium Corporation of America, Grupo Acerero del Norte, S.A. de C.V.,
Canfibre of Riverside, Inc., Custom Shops Corporation, Capital Gaming, Inc.,
General Rental, Inc., Orange County, California, Qualis Care LP, Days Inns of
America, Inc. and Orion Pictures Corporation.
• Significant creditor or creditor committee representations in Chapter 11 cases
include Technical Olympic USA, Inc., Refco Inc., Calpine Corporation, Mirant
Corporation, Worldcom, Inc., Outboard Marine Corporation, The Pullman
Company, Inc. and AM International, Inc.
• Significant participation in structured finance transactions involving Merrill
Lynch Mortgage Capital Inc., First Union National Bank, Marriott Ownership
Resorts, Inc., David Bowie and others.
Honors
Mr. Smolinsky is listed in New York Super Lawyers (2007) for bankruptcy and
creditor/debtor law.
Mr. Smolinsky is a member of the Bankruptcy Committee of the New York City Bar
Association, American Bankruptcy Institute and Turnaround Management
Association.
Publications
• “District Court Decision Negates Bank Guarantees Granted by Fortune 500
Affiliates,” Client Alert, November 29, 2004
• “Power Agency Fights Court over Bankruptcy Rights,” International Financial Law
Review, November 2004
• “Power Contracts and Bankrupt Generators,” Project Finance NewsWire, October
2004
• Project Finance NewsWire, June 2003
• “Anticipating A Possible Bankruptcy,” Project Finance NewsWire, (co-author),
December 2002
• Collier on Bankruptcy, 15th edition, (contributing editor), 1997
J OSEPH H. S MOLINSKY
• “Lenders Beware: A Guaranty is not a Guarantee,” Bankruptcy Strategist, August 1989
• “Leveraged Buyouts in Bankruptcy: A Strategic Perspective,” Norton Bankruptcy Law Advisor, August 1988
Speeches and Events
• “Working with Banks, Creditors’ Committees and Other Third Parties,” Legal Risks for Accountants,
December 2008
• “The New American Skyline: Builder/Developer Workouts and Restructuring,” ABI 19th Annual Winter
Leadership Conference, December 2007
• The Coming Wave . . . What the Turmoil in the Credit Markets Means — and What to Expect in 2008, New
York, NY, October 24, 2007
• “Availability/Limitation of Relief to Different Entities,” Intersection of Bankruptcy & Tax: Planning &
Pitfalls Including the Emergent Roles of Hedge Funds & Private Equity, New York, NY, June 5, 2007
• One Year On: Key Issues and Developments in the First Year of the 2005 Bankruptcy Code Amendments,
New York, NY, October 17, 2006
• “Issues Affecting the Automotive Industry,” Turnaround Management Association, New York Chapter,
New York, NY, September 2006
• The New Bankruptcy Law: Understanding & Navigating the Maze of Changes Created by the New Law,
New York, NY, November 10, 2005
• “The Rise of Hedge Funds as Players in Restructuring,” Plan of Reorganization Conference and Cocktail
Reception, Association of Insolvency & Restructuring Advisors, New York, NY, November 2005
• “Buying and Selling Distressed Companies: Creating Value from Chaos,” 7th Annual Distressed Debt
Investing Forum, New York, NY, June 2004
• “Restructuring the Overleveraged Company: Keeping the Lights On,” New York City Bar Association, May
2004
• “Protecting Intellectual Property Interests in Bankruptcy,” New York City Bar Association, June 2003
• “Trademark and Bankruptcy,” The Practising Law Institute’s Advanced Seminar on Trademark Law, New
York, NY, May 21, 2003
• “M&A for Distressed Companies,” New York Capital Roundtable, August 2002
• “Practical Skills – The Basics of Bankruptcy Practice,” New York Small Business Association (NYSBA), April
2002
Education
Binghamton University, B.A., 1985
Brooklyn Law School, J.D., 1988
Professional Background
Judicial clerk for the Honorable Conrad B. Duberstein, Chief United States Bankruptcy Judge for the Eastern
District of New York, 1988-1990
Willkie Farr & Gallagher, 1990
Sonnenschein Nath & Rosenthal, 1999-2000
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N. T HEODORE Z INK , J R .
PARTNER
New York, NY 10112
tel +1 (212) 408-5356
fax +1 (646) 710-5356
online www.chadbourne.com/tzink
Practice Areas
Restructuring
Regions
North America
United States
Canada
Ted Zink has more than 20 years of experience in bankruptcy, workouts and
creditors’ rights. Mr. Zink has handled various bankruptcy situations and troubled
credit workouts, including the representation of debtors in pre-packaged and
conventional Chapter 11 cases, advising agent banks in the out-of-court
restructuring of syndicated facilities, and representing secured and unsecured
lenders in Chapter 11 and cross-border insolvencies.
• Represented syndicated lending group in connection with the out-of-court
restructuring of a large Venezuelan manufacturer.
• Represented a European bank group in Lernout-Hauspie and Dictaphone
Chapter 11 cases.
Admissions
1991 Illinois
1984 Missouri
1996 New York
• Represented KBC Bank N.V. as agent in two troubled loan situations in which
Enron Corporation was swap counter-party.
Languages
English
• Represented ATC Group Services Inc., in its pre-negotiated Chapter 11 case
pending in the Southern District of New York.
• Represented the official committee of unsecured creditors in the Pocket
Communications, Inc. Chapter 11 case involving the Federal Communications
Commission’s (FCC) C-block wireless telecommunications licenses.
• Represented Chivor S.A. E.S.P. in its successful pre-packaged Chapter 11 case in
the Southern District of New York.
• Represented the unsecured creditors’ committee in the New York Post
bankruptcy.
• Represented SCI Television, Inc. and Busse Broadcasting Corporation in their
respective pre-packaged Chapter 11 cases.
• Represented purchases of businesses at Section 363 sales.
Honors
Mr. Zink is listed in New York Super Lawyers (2007) for bankruptcy and
creditor/debtor law.
Publications
• “Non-Statutory Insider Status: Closeness Not Enough,” (co-author), Law 360,
October 22, 2008
• “Managing Lenders’ Expectations: Strategies to Survive Loan Default,” (coauthor), Ethanol Producer Magazine, June 2008
• “An Unsecured Creditor’s Rights to Recover Attorneys’ Fees: Highlighting the
N. T HEODORE Z INK , J R .
Section 502/Section 506 Dispute,” (co-author), Pratt’s Journal of Bankruptcy Law, June 2007
• “Failure to Timely Record Mortgage May Jeopardize such Mortgage in a Mortgagor Bankruptcy,” Client
Alert, May 7, 2007
• “Are There Any Limits to Mandatory Subordination Under Section 510(b) of the Bankruptcy Code?,” (coauthor), Pratt’s Journal of Bankruptcy Law, March 2007
• “US Bankruptcy Code-Chapter 15: The Early Returns,” (co-author), Insolvency Intelligence, March 2007
• “The Yukos Chapter 15 Case: The Story of How a United States Bankruptcy Court’s Pragmatic Approach to
a Novel Problem Aided a Russian Receiver to Protect Assets Located in the Netherlands,” (co-author), INSOL
International, October 2006
• “Court Rejects Attempt to Cancel Contract in Bankruptcy,” Project Finance NewsWire, (co-author),
September 2006
• “The Effect of Bankruptcy on Letters of Credit as Security for Real Property Leases,” Bloomberg Corporate
Law Journal, August 2006
• “Third Circuit Panel Circumscribes ‘Deepening Insolvency’ Cause of Action,” Client Alert, July 10, 2006
• “When Will Equity be Heard in Chapter 11?,” Journal of Bankruptcy Law, June 2006
• “Buyers of Bankruptcy Claims Should Proceed With Caution,” Client Alert, April 11, 2006
• “Third Circuit Reverses Substantive Consolidation Decision in Owens Corning Bankruptcy Case,” Journal
of Bankruptcy Law, October 2005
• “Are Subsidiaries Really Bankruptcy Remote?,” Project Finance NewsWire, (co-author), October 2005
• “Second Circuit Decision Limits Non-Debtor Party Releases,” Client Alert, September 1, 2005
• “Recent Amendments to the Bankruptcy Code Affecting Commercial Entities,” INSOL International, July
2005
• “Recent Amendments to the United States Bankruptcy Code Affecting Commercial Entities,” Client Alert,
May 2005
• “District Court Decision Negates Bank Guarantees Granted by Fortune 500 Affiliates,” Client Alert,
November 29, 2004
• Project Finance NewsWire, October 2002
• “Anticipating A Possible Bankruptcy,” Project Finance NewsWire, (co-author), October 2002
Speeches and Events
Education
University of Notre Dame, B.B.A., 1976
Washington University in St. Louis, Olin School of Business, M.B.A., 1978
Washington University in St. Louis School of Law, J.D., 1984
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D OUGLAS E. D EUTSCH
COUNSEL
New York, NY 10112
tel +1 (212) 408-5169
fax +1 (646) 710-5169
online www.chadbourne.com/ddeutsch
Douglas Deutsch’s practice has involved representation of creditors’ committees,
secured and unsecured creditors and debtors.
Practice Areas
Restructuring
Industries
Consumer Products
Regions
North America
United States
Admissions
1997 New York
1998 U.S.D.C. - E.D. Mi.
2002 U.S.D.C. - E.D.N.Y.
2002 U.S.D.C. - S.D.N.Y.
Languages
English
• Represents or represented financial institutions and other creditors in
the following bankruptcy cases: Ciena Capital Funding, WCI Communities,
CMC Holding Corp., Enron, Solutia, Inc., Androscoggin Energy LLC, Global
Crossings and K-Mart. Represented financial institutions and other creditors in
numerous out-of-court restructurings.
• Represents substantial creditors in a number of the subprime brankruptcy
cases including New Century, HomeBanc Mortgage Corp. and Aegis Mortgage.
• Represented the official committee of unsecured creditors in the Spiegel, Inc. et
al. (Eddie Bauer, Spiegel and Newport News) Chapter 11 bankruptcy cases.
• Represents creditor trusts as successor to the Debtors in the Parmalat and
Spiegel bankruptcy cases.
• Represented debtors in bankruptcy cases and out-of-court debt restructurings.
• Member: American Bankruptcy Institute (Co-Chair, Young and New Members
Committee)
• Advisory Board Member, American Bankruptcy Institute Law Review
Publications
• "Repurchase Agreements and Other Issues In Subprime Lender Cases," (coauthor), 26th Annual Jay L. Westbrook Bankruptcy Conference (University of
Texas), November 2007
• "BAPCPA: Review and Analysis of Business Bankruptcy Provisions After One
Year," (co-author), Pratt's Journal of Bankruptcy Law, January/February 2007
• "Third Circuit Panel Circumscribes 'Deepening Insolvency' Cause of Action,"
Client Alert, July 10, 2006
• "Ensuring Proper Bankruptcy Solicitation: Evaluating Bankruptcy Law, the First
Amendment, the Code of Ethics and Securities Law in Bankruptcy Solicitation
Cases," American Bankruptcy Institute Law Review, 2003
• "Plan Issues: Classification, Impairment and Subordination Agreements," (coauthor), Advanced ALI-ABA Chapter 11 Business Reorganization Conference, 2000
• "Toxic Spillover from Mass Tort Cases," (co-author), Georgetown Law School
D OUGLAS E. D EUTSCH
Bankruptcy 1999 Conference: Views from the Bench, 1999
• "Acquiring Troubled Companies and Assets," (co-author), Advanced ALI-ABA Chapter 11 Business
Reorganizations Conference, 1998, revised 2000
Speeches and Events
• "Repurchase Agreements and Other Issues in Subprime Lender Cases," (panelist), 26th Annual Jay L.
Westbrook Bankruptcy Conference (University of Texas), Austin, TX, November 15, 2007
Education
Drew University, B.S., 1991
St. John's University School of Law, J.D., Editor-in-Chief, American Bankruptcy Institute Law Review, 1996
St. John's University School of Law, LL.M., American Bankruptcy Institute Scholarship Recipient, 2001
Law Clerk to the Hon. Leif M. Clark, U.S. Bankruptcy Judge, Western District of Texas, 1996-1997
4
A NDREW R OSENBLATT
COUNSEL
New York, NY 10112
tel +1 (212) 408-5559
fax +1 (646) 710-5559
online www.chadbourne.com/arosenblatt
Practice Areas
Restructuring
Regions
North America
United States
Admissions
1998 New York
Languages
English
Andrew Rosenblatt has handled various bankruptcy issues, including the
representation of debtors in Chapter 11, advising borrowers and lenders in out-ofcourt restructurings, secured and unsecured lenders in Chapter 11 cases and
foreign representatives in Section 304 cross-border ancillary proceedings.
• Representing a number of the largest creditor banks and insurance companies
in Enron Corporation’s Chapter 11 bankruptcy.
• Represented KBC Bank, N.V. in its capacity as a member of the creditors’
committee in The National Benevolent Association of the Christian Church
(Disciples of Christ) bankruptcy cases.Represented St. Paul Fire and Marine
Insurance Company in its capacity as a member of the creditors’ committee in
both the Enron Corp. and Sunbeam Corp. bankruptcy cases.
• Represented St. Paul Fire and Marine Insurance Company, as issuer of surety
bonds, in the Bethlehem Steel Chapter 11 cases.
• Represented the Chapter 7 trustee in the Computers Unlimited of Wisconsin
case.
• Represented the creditors’ committees in the New York Post, Daily News and
Pocket Communications bankruptcies.
• Represented ATC Group Services, Inc. in its successful reorganization.
• Represented several foreign debtors in ancillary proceedings in the United
States, successfully obtaining permanent injunctive relief in each case.
Mr. Rosenblatt is a member of the American Bankruptcy Institute and American
Bar Association.
Publications
• “No Court Approval Needed for Creditor Seeking Equitable Subordination of
Another’s Claim,” American Bankruptcy Institute Journal, November 2008
• “A Tip for Lenders When Drafting Make-Whole Provisions,” International
Restructuring NewsWire, September 2007
• “An Unsecured Creditor’s Rights to Recover Attorneys’ Fees: Highlighting the
Section 502/Section 506 Dispute,” (co-author), Pratt’s Journal of Bankruptcy Law,
June 2007
• “Buyers of Bankruptcy Claims Should Proceed With Caution,” Client Alert, April
11, 2006
A NDRE W R OSENB LATT
Speeches and Events
• “Section 304 of the United States Bankruptcy Code: In Need of a Fix?,” INSOL International Conference,
Bermuda, April 1999
Education
Binghamton University, B.S., 1994
Hofstra University School of Law, J.D., Member, Hofstra Law Review, 1997
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F RANCISCO V AZQUEZ
ASSOCIATE
New York, NY 10112
tel +1 (212) 408-5111
fax +1 (646) 710-5111
online www.chadbourne.com/fvazquez
Practice Areas
Restructuring
Regions
North America
United States
Admissions
1995 New Jersey
1996 New York
1997 U.S.D.C. - E.D.N.Y.
1997 U.S.D.C. - S.D.N.Y.
Languages
English
Frank Vazquez’s practice focuses on bankruptcy and financial restructuring. He has
represented debtors in pre-packaged and conventional Chapter 11 cases, advised
borrowers and lenders in out-of-court restructurings, as well as advised secured
and unsecured lenders in Chapter 11 cases and foreign representatives in crossborder ancillary proceedings.
• Represented Chivor S.A. E.S.P., ATC Group Services Inc., Magnesium Corporation
of America, Canfibre of Riverside, Inc., Regency Cruises, Inc., and Urban
Communicators PCS Limited Partnership, among others, as debtors in
possession in their respective Chapter 11 cases.
• Represented the receiver appointed in the Russian bankruptcy proceeding of
Yukos Oil Company in its case under Chapter 15 of the U.S. Bankruptcy Code.
• Represented members of the GLM and WFUM Pools in their cases under
Chapter 15 of the U.S. Bankruptcy Code.
• Represented the official committees of unsecured creditors in Crown Books
Corporation and Sher Distributing Company in their respective Chapter 11
cases.
• Represented shareholders and DIP lenders in the Avianca Airlines Chapter 11
case.
• Represented Sabena Airlines and Jazztel P.L.C. in their respective ancillary
bankruptcy proceedings.
• Represents Ernst & Young as the Australian and Bermudian liquidators in the
insurance insolvency of New Cap Reinsurance Corporation Ltd.
• Obtained recognition of schemes of arrangement proposed on behalf of several
foreign insurance companies, including Aviation and General Insurance
Company, Belvedere Insurance Company, Black Sea & Baltic General Insurance
Company, Compagnie Européene D’Assurances Industrielles S.A., Lion City RunOff Pte Ltd., Ludgate Insurance Company, Nichido Fire and Marine Insurance
Company, and United Standard Insurance Company.
• Represents PricewaterhouseCoopers as provisional liquidator for Independent
Insurance Company, and as administrator of Folksam International Insurance
Company Ltd.
• Represents KPMG as provisional liquidator for Manhattan Investment Fund.
Mr. Vazquez is a member of the American Bankruptcy Institute and the Advisory
Board of the American Bankruptcy Institute Law Review. He also spoke on
F RANCISCO V AZQU EZ
“Bankruptcy, Workouts and Reorganizations” at New York University School of Continuing and Professional
Studies in 2006, 2007 and 2008.
Publications
• “Non-Statutory Insider Status: Closeness Not Enough,” (co-author), Law 360, October 22, 2008
• “Modification of Automatic Stay to Permit Litigation to Proceed Remains Possible,” ABI Journal, October
2008
• “U.S. Courts Should Continue to Grant Recognition to Schemes of Arrangement of Solvent Insurance
Companies,” Norton Journal of Bankruptcy Law and Practice, August 2008
• “US Bankruptcy Code-Chapter 15: The Early Returns,” (co-author), Insolvency Intelligence, March 2007
• “The Yukos Chapter 15 Case: The Story of How a United States Bankruptcy Court’s Pragmatic Approach to
a Novel Problem Aided a Russian Receiver to Protect Assets Located in the Netherlands,” (co-author), INSOL
International, October 2006
• “Cross Border Bankruptcy Developments: The Movement Towards Universality in the United States,”
Annual Survey of Bankruptcy Law, December 2005
• “U.S. Bankruptcy Code Amendments Affect Ancillary Proceedings: Chapter 15 to Replace Section 304,”
Client Alert, May 9, 2005
• “An Overview of the Implications of the Bankruptcy Code on the Ability to Arbitrate,” Annual Survey of
Bankruptcy Law, 2004
• “Anticipating A Possible Bankruptcy,” Project Finance NewsWire, (co-author), October 2002
• Project Finance NewsWire, October 2002
• Cross-Frontier Insolvency of Insurance Companies, (co-author), Sweet & Maxwell, 2001
Education
Hofstra University, B.A., 1991
St. John’s University School of Law, J.D., 1994
Managing Editor, American Bankruptcy Institute Law Review, 1993-1994
Staff Member, New York International Law Review, 1992-1993
Law Clerk to R. Clifford Fulford, U.S. Bankruptcy Judge, Northern District of Alabama, 1994-1995
Law Clerk to Manuel D. Leal, Chief U.S. Bankruptcy Judge, Southern District of Texas, 1995-1997
17
J. A LLEN M ILLER
PARTNER
New York, NY 10112
tel +1 (212) 408-5454
fax +1 (212) 541-5369
online www.chadbourne.com/amiller
Practice Areas
Mergers and Acquisitions
Securities Compliance
Private Funds
Private Equity Transactional
Capital Markets
Corporate
Corporate Governance
Industries
Energy
Regions
Latin America
Canada
North America
United States
Admissions
1980 New York
Languages
English
Allen Miller is the head of Chadbourne’s corporate department and co-head of the
Latin America practice group. Mr. Miller has more than 25 years of experience as a
corporate and securities lawyer, advising public and private companies and their
boards of directors on a broad spectrum of matters, including mergers,
acquisitions, divestitures, corporate governance issues, securities law matters,
restructurings, joint ventures, leveraged buyouts, private placements, public
offerings and privatizations. A significant part of Mr. Miller’s practice consists of
work in Latin America. He has extensive cross-border merger and acquisition
experience and has represented numerous companies and investment banks in
U.S. capital markets offerings and financings of Latin American issuers.
Domestic Transactional Experience
• Ongoing representation of a major U.S. energy company in merger and
acquisition matters.
• Ongoing representation of a major database company in all of its technology
company acquisitions.
• Ongoing representation of independent directors of a major U.S. retail company
in corporate governance matters.
Cross-Border Transactional Experience
• The largest private equity transaction in Chile.
• Three cross-border tender offers.
• Three ADR-driven multi-jurisdictional proxy fights.
• The only 100-year bond offering by a Latin American issuer.
• A precendent setting cross-border restructuring.
Honors
Mr. Miller is cited in The Legal 500 (2007) for international mergers and
acquisitions, Chambers Global - The World’s Leading Lawyers for Business (20072008), Chambers USA - America's Leading Lawyers for Business (2007-2008) and
Chambers Latin America - Latin America's Leading Lawyers for Business (2009).
Publications
• "Chile: A Renewed Path to Energy Autonomy," (co-author), An extract from
Volume 7, Issue 8 of Latinlawyer magazine - www.latinlawyer.com, October 2008
J. A LLEN M ILL ER
• "The US-Latin American Connection," Iberian Lawyer, July/August 2008
• "Certain Shelf Registration Statements Will Expire Beginning December 1, 2008," Client Alert, July 31,
2008
• "Foreign Private Issuers Preparing Financial Statements in Accordance with IFRS are No Longer Required
to Reconcile to U.S. GAAP," April 17, 2008
• "SEC Proposes Changes to Registration Exemption for Foreign Private Issuers Under Exchange Act Rule
12g3-2(b)," April 4, 2008
• "Pay-to-Play or No-Way," The Deal, January 15, 2008
• "Project Sales: Tips for the Unwary," Project Finance Monthly, March 2003
Speeches and Events
Mr. Miller has lectured, conducted seminars and participated in conferences on corporate and securities
law matters in Argentina, Brazil, Chile, Mexico and throughout the United States.
Education
University of New Hampshire, B.A., cum laude, 1972
Cornell Law School, J.D., Note and Comment Editor, Cornell International Law Journal, 1979
2
M ARC M. R OSSELL
PARTNER
New York, NY 10112
tel +1 (212) 408-1057
fax +1 (646) 710-1057
online www.chadbourne.com/mrossell
Practice Areas
Capital Markets
Corporate
Finance
Restructuring
Industries
Communications, Media and
Technology
Energy
Food and Beverages
Pharmaceuticals
Mining and Metals
Regions
Latin America
North America
United States
Admissions
1984 New York
Languages
English
French
Spanish
Marc Rossell has extensive experience in initial public offerings, both as issuer’s
and underwriters’ counsel and was named as one of the “Outstanding IPO Lawyers
in 2000” by IPO Journal. He was involved in many of the largest securities offerings
out of Latin America, including landmark privatization offerings by the Argentine
Government of the national oil company and the telephone companies, the
privatization of the Peruvian telephone company, as well as many high-yield debt
offerings and equity offerings of companies in Mexico, Argentina, Chile, Venezuela
and other countries. During the 1980’s he spent a considerable amount of time as
bank advisory committee counsel focusing on the restructuring of the external
debt of many countries in Latin America.
Throughout his career, Mr. Rossell has counseled a global and diverse client base.
Notable representations include:
• AES Corporation and AES Gener S.A. in connection with the $700 million
recapitalization plan for AES Gener S.A., including cash tender offers and
consent solicitations for its outstanding convertible and Yankee bonds, a $400
million offering of high-yield senior notes and the restructuring of
intercompany debt.
• Bank Advisory Committee for Brazil, and Citibank, N.A., as administrative agent,
in the restructuring of the external public sector dept of the Federative
Republic of Brazil in “Phase II” of Brazil’s restructuring in 1983-1984.
• Bank Advisory Committee for the Republic of Uruguay, and Citibank, N.A., as
administrative agent, in the restructuring of the external public sector debt of
Uruguay in 1984-1985.
• Bank Advisory Group for Jamaica, and the Bank of Nova Scotia, as administrative
agent, in the restructuring of the external debt of Jamaica.
• Bank Advisory Group for the Republic of Uruguay, and Citibank, N.A. as closing
agent, in connection with the Republic of Uruguay’s 1990 Financing Plan,
involving the issuance of “Brady” bonds in exchange for commercial bank debt.
• Bear, Stearns & Co. Inc., as initial purchaser of $220 million of senior secured
notes issued by Newland International Properties, Corp., a Panamanian
company, to finance the construction of the Trump Ocean Club in Panama City,
Panama.
• Bear, Stearns & Co. Inc., as initial purchaser, in connection with a novel $250
million senior secured bond offering for Cap Cana S.A., a Dominican Republic
luxury resort developer, secured by real estate mortgages and receivables and a
construction escrow account. It was cited as “Deal of the Year 2007” by The
M ARC M. R OSSEL L
Banker and voted “Best Asset-Backed Bond of 2006” by Latin Finance.
• Chase Securities Inc., as lead underwriter, in the $250 million registered high-yield bond offering for
Grupo Industrial Durango, S.A., a Mexican paper company.
• Citibank, N.A., as lead arranger, in connection with the offering by The United Mexican States of $1 billion
of floating rates notes due 1997. Offering represented the return of Mexico to the international capital
markets following the peso devaluation crisis of December 1994.
• Citicorp Securities, as initial purchaser, in connection with the $200 million Rule 144A/Regulation S
offering by Copamex Industrias, S.A. de C.V. of its 11.275% senior notes due 2004.
• Citigroup Global Markets, as sole underwriter, in connection with a Rule 144A/Regulation S $200 million
offering by the Commonwealth of the Bahamas of its 6.625% notes due 2033.
• Credit Suisse, as lead underwriter, in the IPO of common stock of 724 Solutions Inc., a Canadian software
company.
• Credit Suisse, as initial purchaser, in connection with the $145 million Rule 144A/Regulation S offering by
Grupo Azucarero Mexico, S.A. de C.V., of its 11-1/2% senior notes due 2005.
• Credit Suisse, as initial purchaser, in the $250 million subordinated convertible note offering for
Safeguard Scientifics Inc.
• Credit Suisse and Merrill Lynch & Co., as joint global coordinators, in the $3 billion global IPO and equity
offering for YPF, S.A., the Argentine state controlled oil company. It is the largest privatization in Latin
America to date.
• Exalmar - Pesquera Exalmar S.A., a Peruvian fishing company, in connection with a $75 million syndicated
credit agreement established for the purpose of providing financing for the acquisition of another fishing
company in Peru.
• Goldman, Sachs & Co., as lead underwriter, in connection with the $2 billion registered secondary
offering by The Kingdom of Sweden of its remaining interest in Pharmacia & Upjohn, in the form of
35,766,282 shares of common stock, in the form of shares and Swedish depositary shares.
• Grupo FAMSA, S.A. de C.V., a Mexican retailer, and its U.S.-based subsidiary, in connection with a $110
million secured credit facility provided by General Electric Capital Corporation.
• Grupo Simec, S.A.B. de C.V., a Mexican AMEX-listed steel company, in its $200 million follow-on registered
equity offering of Class B shares and American Depositary Shares representing Class B shares.
• Grupo Imsa, S.A.B. de C.V. and Tarida S.A. de C.V., a special purpose acquisition vehicle for the Canales
Clariond family of Monterrey, in connection with syndicated credit facilities totaling $1.8 billion for the
leveraged acquisition by Tarida of a controlling interest in Grupo Imsa and subsequent tender offers for
the remaining shares in Grupo Imsa.
• Grupo Imsa, S.A.B. de C.V. in connection with the sale of the company to Ternium S.A.
• Grupo Modelo, S.A. de C.V. in connection with the establishment of its Level 1 ADR facility with The Bank
of New York, as depositary bank.
• Industrias CH, S.A. de C.V., a Mexican finished steel producer, in connection with its $140 million
international offering of shares.
• Industrias CH, S.A. de C.V. and its AMEX-listed subsidiary, Grupo Simec, S.A.B. de C.V., in connection with
the acquisition of PAV Republic Inc., a U.S. specialty bar quality steel producer, for a total purchase price
of $229 million, plus the assumption of certain indebtedness.
• Intershop Communications Aktiengesellshaft, a global provider of electronic commerce software, in its
IPO of 3,350,00 American Depositary Shares representing 1,675,000 bearer ordinary shares and the listing
of the ADRs on the Nasdaq National Market.
6
M ARC M. R OSSEL L
• Ispat Mexicana, S.A. de C.V. (now Mittal Steel Lazaro Cardenas S.A. de C.V.) in its $450 million debt
restructuring involving commercial bank debt and an exchange offer of senior export notes.
• Ispat International N.V. (now Mittal Steel Group), a global steel company, in connection with its
corporate reorganization and IPO and NYSE listing.
• Lehman Brothers Inc., as dealer manager, in connection with the $137 million private exchange offer by
Aerovias de Mexico, S.A. de C.V. (Aeromexico) of its 9.75 % notes due 2000 for its existing notes due 1995
and euro-commercial paper and the concurrent solicitation of acceptances of a prepackaged plan or
reorganization under the U.S. Bankruptcy Code.
• Merrill Lynch and J.P. Morgan as joint global coordinators of the $1.2 billion global registered equity
offering for Telefónica del Peru, S.A. It was the largest equity deal in Latin America in 1996.
• Merrill Lynch International Limited, as lead underwriter, in the offering of PRIDES by National Financiera,
S.N.C., exchangeable into common stock of Teléfonos de Mexico, S.A. de C.V.
• Oppenheimer & Co. Inc., as dealer manager and lead underwriter, in connection with the registered
exchange offer of American Depositary Shares representing class B ordinary shares of BAESA for the Rule
144A American Depositary Shares and the concurrent registered secondary offering of 1,500,000 American
Depositary Shares. It was the first listing of an Argentine company on NYSE.
• PaineWebber Incorporated and Citicorp Securities Inc., as global coordinators, in the IPO of ADRs of Grupo
Imsa, S.A. de C.V., a leading Mexican steel and battery company.
• Salomon Smith Barney, as lead underwriter, in connection with the $250 million Rule 144A/Regulation S
offering by Kimberly-Clark de Mexico, S.A. de C.V. of its 8.875 % senior notes due 2009.
• Salomon Smith Barney, as global coordinator, in connection with the $6.5 billion exchange offer by The
Republic of Ecuador of its step-up global bonds due 2012 and its 12% global bonds due 2030 for its existing
“Brady” bonds, including an “exit” consent solicitation for amendments to the existing bonds and a
recession of acceleration. It was the first of its kind in sovereign debt restructurings.
• Solana Petroleum Exploration (Colombia) Limited, as borrower, and Solana Resources Limited, as original
guarantor, in connection with a $100 million three year revolving credit facility provided by BNP Paribas.
The facility will finance Solana’s exploration of Colombian oil reserves.
• Xignux, S.A. de C.V. (formerly known as Axa, S.A. de C.V.) a private Monterrey-based conglomerate, in
connection with its $125 million private exchange offer of its 9 1/2% senior guaranteed notes due 2014 for
its English law governed 9% guaranteed notes due 2004, and the related solicitation of proxies to amend
the related existing notes.
Mr. Rossell is a member of the American Bar Association Association, the New York Sate Bar Association
and the Association of the Bar of the City of New York.
Publications
• “The SEC Refocuses on Short Selling,” (co-author), law.com, January 2009
• “Options for Restructuring Publicly-Traded Debt,” Project Finance NewsWire, January 2009
• “Construction Finance Bonds: Recent Experiences in Latin America,” Latin American Law & Business,
October 31, 2008
• “Nasdaq Joins NYSE and AMEX in Allowing Listing of Special Purpose Acquisition Companies (SPACs),”
August 20, 2008
• “Certain Shelf Registration Statements Will Expire Beginning December 1, 2008,” Client Alert, July 31,
2008
• “Underwriters’ Due Diligence Obligations in the Wake of In re WorldCom”, Wall Street Lawyer, June 2005
7
M ARC M. R OSSEL L
Speeches and Events
• “Globalization and Emerging Trends in the Capital Markets Arena,” Program of the International Law and
Practice Section of the New York State Bar Association, Lima, Peru, September 27, 2007
• “Unlocking the International Capital Markets for Construction Finance in Latin America,” 6th Annual
Securitization in Latin America Summit (SILAS 2007), Miami, Florida, May 15, 2007
• “Unlocking the Capital Markets for Pre-Construction Real Estate Finance,” Latin Finance 2nd Annual
Cumbre Financiera Mexicana, Mexico City, Mexico, February 8, 2007
Education
American University of Paris, A.A., 1974
University of Paris II (Panthéon-Assas), D.E.A., 1979
University of Pennsylvania, LL.M., 1982
8
C ARLOS T. A LBARRACÍN
PARTNER
New York, NY 10112
tel +1 (212) 408-1081
fax +1 (646) 710-1081
online www.chadbourne.com/calbarracin
Practice Areas
Capital Markets
Finance
Project Finance
Industries
Mining and Metals
Transportation
Oil, Gas and LNG
Energy
Carlos Albarracín advises domestic and international clients in a broad range of
matters involving Latin America, including debt and equity offerings, bank and
project financings, debt restructuring, and cross-border mergers and acquisitions,
with a focus on the oil & gas, electric power, transportation and mining sectors.
Capital Markets
• Currently representing Pan American Energy LLC, Argentine Branch, in
connection with the establishment of a $1.2 billion Rule 144A/Regulation S
Global Note Program registered for public offering in Argentina.
• Represented Empresa de Energía de Bogotá S.A. E.S.P., a Colombian electricity
company, in a Rule 144A/Regulation S offering of $610 million 8-year notes.
(November 2007)
Regions
Latin America
North America
United States
• Represented Transportadora de Gas del Interior S.A. E.S.P., Colombia’s largest
natural gas pipeline company, in a Rule 144A/Regulation S offering of $750
million 10-year notes. (October 2007)
Admissions
1993 Argentina
2002 New York
• Represented Interconexión Eléctrica S.A. E.S.P., Colombia’s largest electricity
transmission company, in its contemplated Rule 144A/Regulation S
international offering of American Depositary Receipts. (August 2007)
Languages
English
Portuguese
Spanish
• Represented J.P. Morgan Securities Inc. and Merrill Lynch & Co. as (i) initial
purchasers in a Rule 144A/Regulation S offering of $500 million 10-year notes by
Transportadora de Gas del Sur S.A. (TGS), an Argentine operator of natural gas
pipelines, and (ii) dealer-managers in connection with a tender offer for the
outstanding Rule 144A/Regulation S notes of TGS. (May 2007)
• Represented ISA Capital do Brasil S.A. in a Rule 144A/Regulation S offering of
$354 million in 10-year notes and $200 million in 5-year notes. The notes were
secured by a pledge in the shares held by ISA Capital in Companhia de
Transmissão de Energia Elétrica Paulista – CTEEP. (January 2007)
• Represented International Finance Corporation (IFC) in connection with (i) the
restructuring of approximately $600 million in Rule 144A/Regulation S notes
and bank debt of Transportadora de Gas del Norte S.A. (TGN), an Argentine
operator of natural gas pipelines, and (ii) the issuance by TGN of $400 million in
Rule 144A/Regulation S notes. (September 2006)
• Represented the lenders’ committee of Transportadora de Gas del Sur S.A. (TGS),
an Argentine operator of natural gas pipelines, in connection with (i) the
restructuring of $1.02 billion in bank debt and Rule 144A and Regulation S notes
and (ii) the issuance by TGS of approximately $400 million in Rule
144A/Regulation S notes. (January 2005)
• Represented Sideco Americana S.A., an major Argentine infrastructure company, with respect to (i) the
restructuring of $125 million in Rule 144A/Regulation S, through an acuerdo preventivo extrajudicial
governed by Argentine law and (ii) the issuance of approximately $60 million in Rule 144A/Regulation S
notes registered for public offering in Argentina. (December 2004)
Financing and Project Financing
• Currently representing the sponsors and the project company in connection with a $140.1 million
secured financing to be provided by Inter-American Development Bank and a group of commercial banks
(as B Loan participants) for the construction and operation of a fully-private, public-use, greenfield
container port with infrastructure and superstructure for container berths, warehousing and logistics
facilities in the state of Santa Catarina, Brazil.
• Represented Empresas Públicas de Medellin E.S.P. in connection with a $200 million financing for
construction and development of the 600 MW Porce III hydroelectric complex. The financing was
provided by Bank of Tokyo- Mitsubishi and BBVA New York Branch and supported by a partial credit
guarantee provided by the Japan Bank for International Cooperation (JBIC). (January 2009)
• Represented Standard Bank plc as Administrative Agent and a lender in connection with a $70 million
secured syndicated financing for Ajover S.A., a leading Colombian supplier of construction materials.
(September 2008)
• Represented Pan American Energy LLC, Argentine Branch in connection with a $200 million syndicated
financing arranged by Calyon, JP Morgan Securities Inc. and ABN AMRO Bank, N.V. (June 2008)
• Represented Organización Terpel S.A., a Colombian gasoline distribution and commercialization
company, in connection with a $250 million financing arranged by J.P. Morgan Securities for the
acquisition of REPSOL’s gasoline distribution business in Chile. (January 2008)
• Represented Interconexión Eléctrica S.A. E.S.P. (ISA) and ISA Capital do Brasil S.A. in a $352 million bridge
credit facility to finance a public tender offer (oferta pública de aquisição) for the acquisition of shares
representing 39.28% of the common stock of Companhia de Transmissão de Energia Elétrica Paulista –
CTEEP. The financing was provided by JPMorgan Chase Bank N.A. and ABN AMRO Bank, N.V. (December
2006)
• Represented Fondo de Inversión Privado Bío-Bío, as borrower, in a $240 million financing arranged by
JPMorgan Securities, Inc. for the acquisition by the borrower of 100% of the equity interests in Forestal
Bío-Bío S.A., Norwood S.A., and Sociedad Agrícola y Forestal Alepué Limitada, secured by a pledge in
forestry assets owned by the acquired entities and future receivables of the borrower arising form
purchases of timber by Celulosa Arauco y Constitución S.A. under a long-term supply contract. (October
2006)
• Represented Interconexión Eléctrica S.A. E.S.P. (ISA) in a $550 million financing arranged by JPMorgan
Securities, Inc. and ABN AMRO Bank N.V. for the acquisition of a controlling interest in Companhia de
Transmissão de Energia Elétrica Paulista – CTEEP. (August 2006)
• Represented Central Costanera S.A., an Argentine electricity generation company, in connection with a
$30 million financing with Credit Suisse First Boston International, secured by a pledge on a combined
cycle power plant. (October 2005)
• Represented Companhia Vale Do Rio Doce (CVRD) in connection with (i) a $300 million financing for
Aluminio Brasileiro S.A. (ALBRAS), a Brazilian company jointly owned by CVRD and Nippon Amazon
Aluminum Co., Ltd., arranged by Japan Bank for International Cooperation (JBIC) secured by certain
aluminum export-receivables of ALBRAS and partially guaranteed by CVRD (December 2005) and (ii) a
$400 million syndicated financing arranged by The Bank of Tokyo-Mitsubishi Ltd. and covered by a
political risk insurance policy issued by Nippon Export and Investment Insurance for the development of
the Sossego copper mine in the state of Pará, Brazil. (April 2005)
2
• Represented Empresa Nacional del Petróleo (ENAP), Chile’s state-owned oil and gas company, MAN
Ferrostaal AG and Técnicas Reunidas S.A., as sponsors, in connection with certain amendments to a $100
million financing arranged by BNP Paribas and partially insured by Compañía Española de Seguro de
Crédito a la Exportación (CESCE), Spain’s export credit agency, for the development and construction of a
mild hydrocracking facility at a diesel refinery in Talcahuano, Chile.
• Represented Interconexión Eléctrica S.A. ESP (ISA) in (i) the financing of a $295 million expansion project
that includes two transmission lines and related substations for the Primavera – Bacatá and the
Primavera – Ocaña – Copey – Bolivar line, financed by Corporación Andina de Fomento, Euler Hermes,
Kreditanstalt Für Wiederaufbau (KfW) and Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden N.V. (FMO) (December 2005) and (ii) a $90 million limited-recourse project
financing for the construction and operation of two electricity transmission lines and associated
substations in Bolivia, financed by Inter-American Development Bank and Corporación Andina de
Fomento. (April 2005)
• Represented Empresa Nacional del Petróleo (ENAP), Chile’s state-owned company, MAN Ferrostaal AG,
and Técnicas Reunidas S.A., as sponsors, in connection with (i) a $410 million financing for the
development, construction and operation of a delayed coker complex at ENAP’s Aconcagua Refinery in
Concón, Chile. (June 2005), and (ii) a $100 million financing arranged by BNP Paribas and partially insured
by Compañía Española de Seguro de Crédito a la Exportación (CESCE), Spain’s export credit agency, for the
development and construction of a mild hydrocracking facility at a diesel refinery in Talcahuano, Chile.
(June 2004)
• Represented Sociedad Química y Minera de Chile S.A. (SQM), a Chilean mining company, and one of its
subsidiaries in connection with a $100 million syndicated financing arranged by BBVA Securities, Inc.,
BNP Paribas and Rabobank Curaçao N.V. (March 2005)
• Represented a major Latin American retail group in connection with its bid to acquire a controlling
interest in Ace Home Center, a Peruvian retail company. (2008)
• Represented Empresa de Energía de Bogotá S.A. E.S.P., a Colombian electricity company, in connection
with its acquisition of the assets of Empresa Colombiana de Gas (Ecogas), a state-owned natural gas
pipeline company (February 2007)
• Represented Interconexión Eléctrica S.A. E.S.P. (ISA) in connection with its acquisition of a controlling
interest in Companhia de Transmissão de Energia Elétrica Paulista – CTEEP, Brazil’s second –largest power
transmission company, through a privatization auction conducted by the government of the State of São
Paulo on the Bolsa de Valores de São Paulo (São Paulo Stock Exchange). (August 2006)
• Represented Wellpoint Inc., an NYSE-listed company, in connection with its acquisition of an equity
interest in MCS Health Management Options, Inc., a leading health services company from Puerto Rico.
(August 2006)
• Represented Prospecta Minera Ltda. and Citicorp International Finance Corp. in connection with the sale
of 99.3% of Sociedad Punta de Lobos S.A., Latin America’s largest salt producer, to K+S Aktiengesellschaft
for a reported price of approximately $500 million. (April 2006)
Honors
Mr. Albarracín was ranked W (One to Watch) in Latin American Investment by Chambers USA: America’s
Leading Lawyers for Business in 2007 and ranked U (Up and Coming) in 2008. He was also listed in Chambers
Global - The World’s Leading Lawyers for Business (2008) for corporate and finance. Listed in Legal 500 (2008)
and cited as head of Latin America finance practice.
3
Mr. Albarracín is a member of the New York State Bar Association, the Bar Association of the City of Buenos
Aires, the U.S.-Argentine Council (Washington, DC) and the International Bar Association (Section of
Business Law).
Publications
• “Certain Shelf Registration Statements Will Expire Beginning December 1, 2008,” Client Alert, July 31,
2008
• “Foreign Private Issuers Preparing Financial Statements in Accordance with IFRS are No Longer Required
to Reconcile to U.S. GAAP,” April 17, 2008
• “SEC Proposes Changes to Registration Exemption for Foreign Private Issuers Under Exchange Act Rule
12g3-2(b),” April 4, 2008
• “Ecogas - A Landmark Privatisation,” Project Finance International, March 19, 2008
• “SEC Proposes Changes to Foreign Private Issuer Reporting Requirements Intended to Improve
Accessibility of the U.S. Public Capital Markets and Information Available to Investors,” March 18, 2008
• “TGS Models for Argentina,” Project Finance International, March 2005
• “APE: An Argentine Tale, Part II,” (co-author), International Finance and Treasury, February 2005
• “APE: An Argentine Tale, Part I,” (co-author), International Finance and Treasury, February 2005
• “APE — An Argentine Tale,” Project Finance NewsWire, (co-author), December 2004
• “Argentina – Changes to Merger Control Thresholds,” (co-author), International Antitrust Bulletin,
American Bar Association, Summer 2001
Education
University of Belgrano, School of Law, law degree, 1993
University of Virginia School of Law, LL.M., 1997
Foreign Associate, Hale & Dorr, 1997
Foreign Associate, Mayer, Brown, Rowe & Maw, 1997-1998
Associate, Allende & Brea, 1994-2000; Partner, 2000-2002; Resident Partner (New York), 2001-2002
4
B ORIS O TTO
PARTNER
Chadbourne & Parke, S.C.
Paseo de Tamarindos
No. 400-B Piso 22
Col. Bosques de las Lomas
México D.F. 05120
Mexico
tel +52 (55) 3000-0601
fax +52 (55) 3000-0698
online www.chadbourne.com/botto
Practice Areas
Capital Markets
Arbitration and ADR
Climate Change
Corporate
Finance
Private Funds
Project Finance
Regions
Latin America
Languages
English
Spanish
Boris Otto is the Managing Partner of the Mexico City office, advising Mexican and
foreign companies and financial institutions on all matters related to corporate
finance transactions.
Mr. Otto’s areas of expertise include structured finance transactions, such as
domestic and cross–border securitizations involving asset-backed and future
flows, securitizations of states and municipalities backed by federal contributions,
as payroll taxes, toll-road and bridge fees and on the implementation of the
reforms to the legislations in order to carry out such transactions.
Mr. Otto advises clients on initial and secondary public offerings of stocks,
corporate bonds, sovereign and sub-sovereign bonds, derivatives and synthetic
transactions. This includes exchange and interest rate swaps, synthetic
securitizations, CDOs, credit default swaps and total return swaps.
His expertise includes local and cross-border structured bank financing backed by
diverse assets such as hotels, real estate developments, shopping malls, office
buildings, and hospitals. Mr. Otto’s practice includes the acquisition, sale and
financing of infrastructure projects.
He also advises clients on all aspects of corporate organizations, mergers,
acquisitions and privatizations, as well as debt restructuring for private
companies. Furthermore, Mr. Otto has advised a broad array of clients in
structuring, negotiating and implementing investment funds and private equity
deals. His experience includes representing public and private funds, and fund of
funds, among others.
In addition, he is experienced in coordinating commercial litigation and
arbitration proceedings, and has acted as an arbitrator in forums established
under Chapter XIX of the North American Free Trade Agreement.
• Currently advising Dexia Mexico in the USD $40 million construction of the City
Hall Building in Monterrey, Nuevo León.
• Currently advising Dexia Mexico in the USD $50 million construction of 4
bridges in the State of Aguascalientes.
• Currently advising Dexia Mexico in the USD $30 million construction of the City
Hall Building in Aguascalientes, Aguascalientes.
• Currently advising IXE Bank (Mexican Bank) in the USD $100 million financing
for the State of Zacatecas."
• Currently advising IXE Bank (Mexican Bank) in the USD $500 million
B ORIS O TTO
construction financing of 3 vacation developments in Mexico.
• Currently advising Goldman Sachs in the USD $60 million construction financing of Desarrollo Tres
Marías.
• Advised XL Capital Assurance in the granting of an insurance wrap of the securitization of the future
revenues from the Matehuala By-pass Toll Road.
• Advised the Government of the State of Nuevo León on the design and implementation of a major
infrastructure project regarding a commercial corridor in the city of Monterrey known as the River Walk.
• Advised bidders in 3 separate packages involving the privatization of Mexico's airports (Grupo
Aeroportuario del Sureste, Grupo Aeroportuario del Pacífico and Grupo Aeroportuario Centro Norte). In
the case of Grupo Aeroportuario del Pacífico, lawyers in our firm acted as counsel to the successful
bidders, who formed the company called Aeropuertos Mexicanos del Pacífico, S.A. de C.V., a strategic
partner of the group.
• Advised Goldman Sachs in the USD $150 million construction financing of Bosque Real.
• Advised Dexia Mexico in the USD $30 billion refinancing of the debt of the State of Mexico.
• Advised IXE Bank (Mexican bank) in the first real estate leverage leasing programs of manufacturing
equipment for Mexican subsidiaries of US companies.
• Advised Morgan Stanley in the establishment of its warehouse facility for residential mortgage loans in
Mexico.
• Advised Morgan Stanley in the establishment of its warehouse facility for residential mortgage loans in
Mexico.
• Advised Sociedad Hipotecaria Federal, S.N.C., on practically all aspects of mortgage loan and financial
guaranty securitizations created by SHF.
• Advised Vive Capital Vivienda 1, LP a Canadian fund focused on real estate projects in Mexico.
• Advised Deka Immobilien Investment a German real estate private equity fund in its participation in a
Mexican real estate developer and in its real estate acquisitions in Mexico.
• Advised Aareal Bank AG in a cross-border refinancing related to a five-star hotel on the Mayan Riviera in
the amount of USD $91 million.
• Advised Bank of Tokyo-Mitsubishi (México), S.A., Institución de Banca Múltiple Filial and Water Capital
Services, S.A. de C.V. in implementing a financing program for a Mexican leasing company (leveraged
lease financing) to purchase machinery and equipment, as well as in structuring a USD $20 million
Guaranty Trust covering the rights on the leases, machinery and equipment.
• Advised GMAC in creating a structure whereby US citizens may acquire retirement or vacation homes in
restricted zones, in México, through financing from a foreign entity, having a Guaranty Trust over such
property.
• Advised Metrofinanciera, S.A. de C.V., S.F.O.L., in the cross-border securitization of bridge credits in two
separate issuances: the first amounting to USD $150 million - backed by financial guaranty insurance
issued by Ambac, and the second totaling USD $75 million, without such insurance. This transaction was
awarded the 2005 "Latin America Deal of the Year" by the Asset Securitization Report.
• Advises Fitch México, S.A. de C.V., on rating securitizations by companies and states.
• Advised Sherman Financial Group in the creation of a structured financing for Consupago, S.A. de C.V.,
which was backed by consumption credits in favor of the company in the amount of USD $65 million.
• Advised Grupo GICSA, S.A. de C.V., on the issuance of Securities Certificates (Certificados Bursátiles)
placed on the Mexican Stock Exchange.
2
B ORIS O TTO
• Advised Crédito Inmobiliario, S.A. de C.V., S.F.O.L., on the extension of its program to issue stock
certificates and their placement on the Mexican Stock Exchange.
• Advises Moody's México, S.A. de C.V., on rating securitizations by companies and states.
• Advised Aeropuertos Mexicanos del Pacífico, S.A. de C.V., on a global initial public offering (considered the
largest equity offering in Mexico since Telmex' privatization in 1990), in the amount of USD $1 billion.
• Advised the government of the State of Mexico on the restructuring of its liabilities to the commercial
and development banking system, in the estimated amount of MXN$30 billion.
• Advised Protexa, S.A. de C.V., on the issuance of Commercial Eurobonds under Rule 144-A and Regulation
"S" of the Securities Act, in the amount of USD $20 million; this transaction included the structuring of an
Administration and Payment Trust.
• Advised Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, as placement broker, on the
securitization of the Monterrey - Cadereyta highway toll-road fees. This transaction was awarded the
"Infrastructure Operation of the Year" 2004 by Project Financial International.
• Advised the State of Veracruz on the securitization of Payroll Taxes, in an amount of up to MXN$450
million.
• Advised the State of Mexico on the securitization of Payroll Taxes, in an amount of up to MXN$2 billion.
This transaction was the first of its kind and has been used as a standard in the market.
• Advised the State of Chiapas on the securitization of payroll taxes in an amount of up to MXN$5 billion.
• Represented The Bank of New York, Inc., in the restructuring of global notes issued by a Mexican company
in the amount of USD $200 million.
• Represented XL Capital Assurance in the creation of a total financial guarantee of the securitization of
tolls of the Libramiento de Matehuala (Matehuala Highway) in the amount of USD $550 million.
Honors
Mr. Otto has been listed as one of the leading structured finance lawyers in International Financial Law
Review's 2007 "Guide to the Leading Structured Finance and Securitization Lawyers."
He has also been listed in Madison's "Who’s Who 2007" as a Legal Expert and was named in 2004 as one of the
"Thirty Most Promising People in their Thirties" by Expansion, a Mexican financial magazine.
Publications
Mr. Otto has published several articles on capital markets and securitization in Mexico, among other topics.
His most recent articles are:
• "Mexican Structured Deals: An Overview of What Happened in the First Semester of 2006," Global
Securitisation Review 2006/07, 2006
• "Mexican Structured Deals Gain in Sophistication," International Financial Law Review, November 2005
• "Asset Securitization in Mexico," Global Securitisation Review 2005/06, Euromoney Yearbooks, 2005
Speeches and Events
• Latin American Real Estate Finance Seminar, (speaker), Mexico City, Mexico, September 13, 2007
• "Going Global: When to Place Deals in the International Marketplace," 6th Annual Securitization in Latin
America Summit (SILAS 2007), Miami, Florida, May 15, 2007
3
B ORIS O TTO
• "Latin American Mortgage Securitization," ABS Spring 2007 Conference, (panelist), Miami, Florida, May 1,
2007
• "Financing Options for Home Developers," Opal Financial Group's Inaugural Latin American
Securitization Forum, (moderator), Mexico City, Mexico, February 6-8, 2007
• Securitization of Individual and Bridge Mortgage Loans Portfolio, (instructor), Mexico City, Mexico,
January 30, 2007
• Mexican Capital Markets with a Special Focus on Securitization, (instructor), New York, New York,
November 8, 2006
• "Commercial Mortgage Backed Securities" and "Innovations in the Asset Backed Securitization in Mexico,"
The Inaugural Securitization in Mexico Conference: Financing the Future, (panelist), Mexico City, Mexico,
October 5-6, 2006
• 5th Annual Securitization in Latin America Summit, Miami, Florida, May 17-18, 2006
• Foreign Investment Opportunities in Mexico, Acapulco, Mexico, July 10-13, 2005
• "Mortgage Securitisation Seminar in Mexico," Merrill Lynch and Fannie Mae, June 20-21, 2005
• "Structure Finance in the Mexican Capital Markets," Latin Finance Mexican Financial Summit, Mexico
City, Mexico, June 13-14, 2005
• "Securitization in Mexico and its Benefits to the Local Market," Moody's 6th Annual Briefing, Mexico City,
Mexico, June 1, 2005
• 4th Annual Securitization in Latin America Summit, Miami, Florida, May 18-19, 2005
• "Infrastructure and Real Estate Trust, New Financing and Development Options in Mexico," Fitch Ratings,
Mexico City, Mexico, 2005
• "Securitization in Mexico and its Benefits to the Local Market," Moody's 5th Annual Briefing, Mexico City,
Mexico, June 1, 2004
• "Development of Issuances in Mexico," Fitch Ratings, Mexico City, Mexico, October 2, 2003
Education
Escuela Libre de Derecho, graduated with honors, 1993
Washington College of Law, LL.M., magna cum laude, 1995
Professor, LL.M. program, Universidad Iberoamericana, 1996 - 2005
Professor, Masters of Business Administration program, Universidad Nacional Autónoma de México, 1994 –
1998
4
L UIS E NRIQUE G RAHAM
PARTNER
Paseo de Tamarindos
No. 400-B Piso 22
México D.F. 05120
Mexico
tel +52 (55) 3000-0604
fax +52 (55) 3000-0698
online www.chadbourne.com/lgraham
Practice Areas
Restructuring
Commercial Litigation
Insurance and Reinsurance
Litigation
Special Investigations and
Government Enforcement
Arbitration and ADR
Industries
Technology
Energy
Pharmaceuticals
Transportation
Regions
Latin America
North America
United States
Languages
English
Spanish
Luis Enrique Graham is the head of Chadbourne's dispute resolution practice in
the Mexico City Office. He has extensive experience in complex civil and
commercial litigation, and alternative dispute resolution procedures, including
domestic and international arbitration before the ICC, the ICDR (AAA), the LCIA,
NAFTA/ICSID and other tribunals. In addition, Mr. Graham regularly counsels
clients on FCPA and other U.S. regulations (as well as corresponding local
regulations).
Mr. Graham is recognized as one of the world’s best litigation and arbitration
practitioners by Chambers Global and by The International Who's Who of
Commercial Arbitration and The International Who's Who of Business Lawyers.
He is President of the Mexican Bar Association.
Litigation
• Successfully represented a U.S. corporation in a real estate dispute regarding
the possession of industrial facilities. Respondent counterclaimed for
compensation for purported unlawful possession of the facilities.
• Successfully represented a client in a $50 million controversy involving the
communications cable industry (ICC, Mexico, English). The dispute concerned
the exercise of a shares option through a buy and sell provision.
• Lead counsel to a U.S. company in a title insurance dispute regarding a large
project in Mexico.
• Represented a U.S. company, as claimant (major participant in the
transportation and maritime terminals business in the U.S. and Mexico), in a
multimillion dollar litigation and arbitration of corporate disputes against its
Mexican counterparts (commercial litigation before Mexican courts and
arbitration; AAA, Mexico, English). Obtained a favorable settlement in the
arbitration and favorable decisions in court proceedings.
• Lead counsel to a U.S. company in insurance litigation before Mexican courts
regarding damages to a major beach resort.
• Prepared and conducted a deposition of a hostile witness before a Civil Court in
Mexico City in aid of a U.S. Court proceeding relating to a SEC investigation and
in application of the Hague Convention on the Taking of Evidence Abroad in
Civil or Commercial Matters.
• Initiated a claim procedure and successfully negotiated a settlement, as leading
counsel, in a multimillion dollar dispute between a Mexican investor and the
L UIS E NRIQUE G RAH AM
Government of the Dominican Republic.
• Has represented creditors in defending their interest in major bankruptcy proceedings before the
Mexican courts.
• Obtained the compensation relief sought in commercial proceedings involving the production of one of
the Mexican sports radio shows with the highest ratings.
• Represented a shareholder claimant in a lawsuit involving a compensation for liability incurred by the
company's administration. Reached a favorable settlement.
• Represented a public U.S. Company involved in the minerals industry, as defendant, in a $30 million
controversy with one of its distributors. The client prevailed in all the claims subject matter of the
dispute.
of the dispute.
Arbitration
• Has served as arbitrator in domestic and international arbitrations covering the following industry
areas: telecommunications (CAM, Spanish); computer and informatics services (CAM, Spanish); oil
industry (ICC, English), electricity industry (ICC, Spanish), automobile (Canaco, Spanish), automobile (ICC,
English), maritime services (Canaco, Spanish).
• He is a member of the ICC Latin-American Group of Arbitration and is in the rooster of arbitrators of the
ICDR and the Kuala Lumpur Regional Centre for Arbitration.
• Lead counsel to a major shipping company in an arbitration related to a stock purchase agreement (ICC,
New York, English).
• Represented a Mexican investor in the successful negotiation of a settlement in a multimillion-dollar
dispute against the Government of the Dominican Republic.
• Representing a public sector company in one of the largest arbitrations in Latin America over an oil and
gas project in Mexico (ICC, Mexico, Spanish).
• Successfully defended a leading U.S. corporation in a $10 million-plus international arbitration (AAA,
Mexico, English) in the fast food franchise industry. All claims against the client were dismissed and
compensation was obtained for damages.
• Successfully defended client in a multimillion dollar U.S. arbitration concerning a major office supplies
distributorship agreement. All claims against the client were dismissed (UNCITRAL, Mexico, Spanish).
• Advisor to an investor party, on issues of Mexican law, in an ICSID investment arbitration related to
monetary claims due to government actions to the detriment of claimant's investment.
• Represented one of the world's biggest automobile manufacturers in an arbitration (CAM, Mexico,
English) involving an information technologies contract. Obtained a favorable settlement.
Litigation
• Successfully represented a U.S. corporation in a real estate dispute regarding the possession of industrial
facilities. Respondent counterclaimed for compensation for purported unlawful possession of the
facilities.
• Successfully represented a client in a $50 million U.S. controversy involving the communications cable
industry (ICC, Mexico, English). The dispute concerned the exercise of a shares option through a buy and
sell provision.
• Lead counsel to a U.S. company in a title insurance dispute regarding a large project in Mexico.
6
• Represented a U.S. company, as claimant (major participant in the transportation and maritime
terminals business in the U.S. and Mexico), in a multimillion dollar litigation and arbitration of
corporate disputes against its Mexican counterparts (commercial litigation before Mexican courts and
arbitration; AAA, Mexico, English). Obtained a favorable settlement in the arbitration and favorable
decisions in court proceedings.
• Lead counsel to a U.S. company in insurance litigation before Mexican courts regarding damages to a
major beach resort.
• Prepared and conducted a deposition of a hostile witness before a Civil Court in Mexico City in aid of a
U.S. Court proceeding relating to a SEC investigation and in application of the Hague Convention on the
Taking of Evidence Abroad in Civil or Commercial Matters.
• Initiated a claim procedure and successfully negotiated a settlement, as leading counsel, in a
multimillion dollar dispute between a Mexican investor and the Government of the Dominican
Republic.
• Has represented creditors in defending their interest in major bankruptcy proceedings before the
Mexican courts.
• Obtained the compensation relief sought in commercial proceedings involving the production of one of
the Mexican sports radio shows with the highest ratings.
• Represented a shareholder claimant in a lawsuit involving a compensation for liability incurred by the
company's administration. Reached a favorable settlement.
• Represented a public U.S. Company involved in the minerals industry, as defendant, in a $30 million U.S.
controversy with one of its distributors. The client prevailed in all the claims subject matter of the
dispute.
of the dispute.
Honors
Mr. Graham has been ranked by Chambers Global - The World's Leading Lawyers for Business (2008) for
Mexico Dispute Resolution (Litigation and Arbitration). He was nominated among the world's Pre-eminent
Commercial Arbitration Practitioners by The International Who's Who of Commercial Arbitration (2007 and
2008) and The International Who's Who of Business Lawyers (2007). Mr. Graham received special recognition
by LatinLawyer as one of the "Top Forty under 40" and as a Top Arbitration Specialist in Latin America, cited
as "one of the strongest younger arbitration lawyers in Mexico."
• President (2007-2009) of the Mexican Bar Association.
o Former Commercial Law Board Chairman.
• Advisor on International Private Law to the Ministry of Foreign Affairs since 2006.
• Member of the Arbitration and Mediation Commission of the National Chamber of Commerce of Mexico
City.
• Mexican Delegate before the UNCITRAL Working Group on International Commercial Arbitration, since
1999.
• Member of the Dispute Consulting Committee of the North America Free Trade Agreement, from 1996
through 2006.
• Member of the ICC Latin-American Group of Arbitration, since 2005.
• Member of the Advisory Board of The Institute for Transnational Arbitration, since 2004.
7
Publications
Mr. Graham has written extensively on commercial arbitration and mercantile, corporate and procedural
law. In 1999, he received first prize from the Interamerican Lawyers Federation for best legal book of the
year ("Commercial Arbitration"). Mr. Graham is also a frequent speaker on international law, commercial
arbitration and international transactions.
• "Arbitration in Mexico," (co-author), Arbitration of the Americas 2007, November 2006
• "Acts in Trial of Impossible Restitution Relief in the Event of Enforcement: The Classification of
Substantive and Procedural Rights," Editorial THEMIS, 2005
• "The Arbitral Clause," Manual of Commercial Arbitration, Porrúa Editorial, 2004
• "The Judicial Remission of a Litigation in Arbitration," Editorial THEMIS, 2004
• "The Interpretation of the Legislation in the Subject of Commercial Arbitration," Editorial THEMIS, 2002
• Commercial Arbitration, Editorial THEMIS, 2000
• "Is It Convenient the Use of Commercial Arbitration?," Editorial THEMIS, 2000
• "Is It Convenient the Use of Commercial Arbitration," La Barra, 1998
• "The Arbitral Clause: Some Practical Considerations," Revista de Derecho Privado, Instituto de
Investigaciones Jurídicas, UNAM, 1997
• "The Arbitral Clause: Some Practical Considerations," Revista de Derecho Privado, Instituto de
Investigaciones Jurídicas, UNAM, 1997
• "Corporations' Short-Cash and Its Legal Consequences. Issues on Judicial Enforcement," Editorial THEMIS,
1996
• "The Commercial Summary Proceedings: Dealing with Non-Monetary Claims," Revista de Derecho Privado,
Instituto de Investigaciones Jurídicas, UNAM, 1995
• "The Reform of the Commercial Legislation," El Foro, Barra Mexicana, Colegio de Abogados, A.C., 1994
• "Towards a Revalorization of Presumptions: A Special Reflection for Commercial Disputes," Tribunal
Superior de Justicia del Estado de Tabasco, Revista Jurídica, 1994
• "Leasing Non-Material Goods," El Foro, Barra Mexicana, Colegio de Abogados, A.C., 1994
• "The Policy of Law in the crisis of the Mexican System," El Nacional, INSTANCIA, 1992
• "Questioning the Law," El Nacional, INSTANCIA, 1992
• "Vindicating Monetary Law," El Nacional, INSTANCIA, 1991
• "Challenges of the International Scenario," Mexico and the 21st Century, Universidad Autónoma
Metropolitana, 1988
Speeches and Events
• International Arbitration Conference (speaker), Panama City, Panama, September 8-9, 2008
• Panel on International Organizations for Industry and Commerce, Organized by the International
Association of Lawyers and the Mexican Bar Association, chairman, Mexico City, Mexico, April 19, 2008
• Course on Commercial Arbitration, Mexico City, Mexico, April-October 2008
• "Conduct of International Arbitration," Latin American Leading Arbitrators' Symposium, Miami, Florida,
November 6-7, 2007
8
• International Commercial Arbitration in Latin America Conference, speaker, Miami, November 4-6, 2007
• "Perspectives in North America," ADR After NAFTA, The International Centre for Dispute Resolution,
Toronto, Canada, September 28, 2007
• "Arbitration Proceedings and Remedies for Construction Conflicts," ICC and Mexico's Arbitration Center
Seminar, Mexico City, Mexico, June 28, 2007
• "ICDR North America Dispute Resolution Series; Evaluation of Risk: Avoiding the Difficulties and Errors in
International Arbitration," International Arbitration Workshop, speaker and panel moderator, Mexico
City, Mexico, June 12, 2007
• "Application of International Agreements in Arbitration Matters and the Regulatory Framework Created
by Unicitral," Presentation to the British Embassy, March 29, 2007
• Institute of Administrative Justice Studies of the Federal Administrative and Fiscal Court on the book,
"General Theory of Interpretation," authored by Manuel Hallivis Pelayo, Judge of the Superior Court of
the Federal Administrative and Fiscal Court, presentation, Mexico City, Mexico, March 14, 2007
• "The Application of International Treaties in the Matter of Arbitration and The Normative Frame Created
by Uncitral," Seminar Resolution of Arbitration "Lados" in Mexico and London, Mexico City, Mexico, March
9, 2007
• "An International Commercial Arbitration and Mediation Conference," The International Centre for
Dispute Resolution Conference on International Commercial Arbitration and Mediation, Washington,
District of Columbia, November 15, 2006
• Annual Meeting of the International Chamber of Commerce Latin American Arbitration Group, Paris,
France, September 26, 2006
• "Interim Measures in Arbitral Proceedings," Decision 2006: Debates on Key Issues in International
Arbitration, The International Section of the State Bar of California, seminar, Newport Beach, California,
March 17, 2006
• "Limits, Methods, Definitions and Customary Practices in Matters of Discovery and Information of
Exchange," Decision 2006: Debates on Key Issues in International Arbitration, The International Section of
the State Bar of California, panelist, Newport Beach, California, March 17, 2006
• The Institute for Transnational Arbitration, Mexico City, Mexico, March 6, 2006
• "Comparative Analysis of International Arbitration," International Center of Dispute Resolution (ICDR)
Seminar, Dallas, Texas, June 15, 2005
• "The Defense of the Enterprise Outside Tribunals: Alternate Means for the Dispute of Resolutions,"
American Chamber, Mexico City, Mexico, May 31, 2005
• "The Agreement of Arbitration and the Terms of Reference," International Chamber of Commerce
Seminar, Mexico City, Mexico, October 31, 2003
• "Reception of Evidence to be Used in Foreign Proceedings," XXV National Seminar of International, Private
and Compared Law, Mexico City, Mexico, October 19, 2001
• "Electronic Commerce and the Mexican Legislation," International Seminar on UNDROIT Commercial and
Financial Conventions on Uniform Law, Mexico City, Mexico, November 6, 2000
• "Actual Trends of Arbitration," Chartered Institute of Arbitrators Conference, Mexico City, Mexico, May 11,
2000
• "The Model Law of UNCITRAL on Electronic Commerce" Conference dictated at the Mexican Stock
Exchange Market, organized by the Mexican Bar Association at the Seminar "Legal Regimen of Electronic
Commerce", Mexico City, Mexico, November 8, 1999
9
• "Liability in Informatics Agreements," Conference dictated at the Mexican Bar Association at the Seminar
Legal Aspects of the Problem of Informatics toward the year 2000, Mexico City, Mexico, September 8, 1999
• "The Judicial Test of the Arbitrational Award," Mexico City, Mexico, June 8, 1999
• "The Arbitrational Clause: Consideration and Practices," Mexico City, Mexico, February 18, 1998
• "The UNDROIT principles about International Commercial Agreements: The Right to Ask for the
Enforcement, or Completion and Compensation," Mexico City, Mexico, October 29,1997
• "Enforcement of Foreign Resolutions," France, November 24, 1995
• "Financial Leases Over Intangible Goods," Mexico City, Mexico, 1995
Education
Universidad Nacional Autónoma de México, B.A., magna cum laude, 1983
American University, M.A., 1986
Panamerican University, J.D., cum laude, 1998
10
J OSÉ A NTONIO C HÁVEZ
PARTNER, CHADBOURNE & PARKE, S.C.
Paseo de Tamarindos
No. 400-B Piso 22
México D.F. 05120
Mexico
tel +52 (55) 3000-0621
fax +52 (55) 3000-0698
online www.chadbourne.com/jchavez
Practice Areas
Capital Markets
Corporate
Finance
Private Funds
Industries
Transportation
Regions
Latin America
Languages
English
Spanish
José Antonio Chávez advises Mexican and foreign companies and financial
institutions on all matters related to financial transactions.
Mr. Chávez is experienced in multiple securitizations by states and municipalities
backed by federal contributions, as well as state and municipal revenues such as
payroll taxes, toll-road and bridge fees, motor vehicle use and possession taxes, as
well as advising such states and municipalities on the implementation
of legislative reforms to carry out such transactions.
He is highly experienced in domestic and cross-border asset-backed
securitizations and future flow, transactions involving accounts receivable,
consumer credits, toll-road fees derived from federal and state concessions, rents,
tax contributions and automobile loans, among others.
Mr. Chávez has experience advising clients in connection with mortgage loan
securitizations, bridge financing facilities and warehouse facilities. He also advises
clients on all aspects of corporate organizations, mergers, acquisitions and
privatizations, as well as debt restructuring for private companies, states and
municipalities, as well as infrastructure projects. Likewise, Mr. Chávez has advised
a broad array of clients in structuring, negotiating and implementing investment
funds and private equity deals. His experience also includes representing public
and private funds, as well as fund of funds, among others.
• Advised the State of Chiapas on the securitization of payroll taxes, in an amount
of up to MXN$5 billion.
• Advised the State of Chihuahua on the securitization of federal contributions,
in an amount of up to MXN$1.2 billion.
• Advised the State of Veracruz on the securitization of motor vehicle use and
possession taxes in an amount of up to MXN$6 billion.
• Advised the State of Veracruz on the securitization of payroll taxes, in an
amount of up to MXN$450 million.
• Advised the State of Mexico on the securitization of payroll taxes, in an amount
of up to MXN$2 billion. This transaction was the first of its kind and has been
used as a standard in the market.
• Advised the government of the State of Mexico on the restructuring of its
liabilities to the commercial and development banking system, in the
estimated amount of MXN$30 billion.
• Advised Hipotecaria Vértice, S.A. de C.V. S.F.O.L. in the securitization of mortgage
J OSÉ A NTONIO C HÁV EZ
loans in an amount of up to MXN$2.0 billion.
• Advises Sociedad Hipotecaria Federal, S.N.C., on practically all aspects of mortgage loan and financial
guaranty securitizations created by SHF.
• Advised Metrofinanciera, S.A. de C.V., S.F.O.L., in the cross-border securitization of bridge credits in two
separate issuances: the first amounting to $150 million backed by financial guaranty insurance issued by
Ambac, and the second totaling $75 million, without such insurance. This transaction was awarded the
2005 "Latin America Deal of the Year" by the Asset Securitization Report.
• Advised Sherman Financial Group in the creation of a structured financing for Consupago, S.A. de C.V.,
which was backed by consumption credits in favor of the company in the amount of $65 million.
• Advised Crédito Inmobiliario, S.A. de C.V., S.F.O.L., on the extension of its program to issue stock
certificates and their placement on the Mexican Stock Exchange.
• Advised Crédito Inmobiliario, S.A. de C.V., S.F.O.L.in a cross-border securitization of a portfolio of bridge
loans.
• Advised Aeropuertos Mexicanos del Pacífico, S.A. de C.V., on a global initial public offering (considered the
largest equity offering in Mexico since Telmex' privatization in 1990), in the amount of $1 billion.
• Advises Fitch México on an ongoing basis in the rating of asset baked and future flow securitizations,
securitizations carried out and structured loans obtained by federal entities and municipalities.
• Advises Standard & Poor’s México on an ongoing basis in the rating of asset baked and future flow
securitizations, securitizations carried out and structured loans obtained by federal entities and
municipalities.
• Advises Moody’s de México on an ongoing basis in the rating of asset baked and future flow
securitizations, securitizations carried out and structured loans obtained by federal entities and
municipalities.
• Advises IXE Grupo in developing new products in public sector securitizations and government finance.
• Represented XL Capital Assurance in the creation of a total financial guarantee of the securitization of
tolls of the Libramiento de Matehuala (Matehuala Highway) in the amount of $550 million.
Publications
• "Tax-Revenue Securitizations: A New Borrowing Option for Public-Sector Issuers in Mexico," (co-author),
PFI Market Intelligence: Latin American Project Finance
Speeches and Events
• "Conference IMN," 2nd Annual Securitization in Mexico: Financing the Future, (moderator), Mexico City,
Mexico, October 29-30, 2007
• "Cross-Border Securitization: The True Value," Opal Financial Group's Inaugural Latin American
Securitization Forum, (moderator), Mexico City, Mexico, February 6-8, 2007
• "Commercial Mortgage-Backed Securities," Securitization in Mexico Conference: Financing the Future,
Mexico City, Mexico, October 5-6, 2006
Education
Instituto Tecnológico y de Estudios Superiores de Monterrey, 1994
12
S ALVADOR F ONSECA
ASSOCIATE
Paseo de Tamarindos
No. 400-B Piso 22
México D.F. 05120
Mexico
tel +52 (55) 3000-0635
fax +52 (55) 3000-0698
online www.chadbourne.com/sfonseca
Practice Areas
Arbitration and ADR
Litigation
Industries
Technology
Energy
Food and Beverages
Pharmaceuticals
Regions
Latin America
Admissions
1996 Mexico
Languages
English
Spanish
Salvador Fonseca's practice focuses on litigation and dispute resolution. He
represents corporate and individual clients in complex domestic and
international litigation and arbitration.
Mr. Fonseca has participated in arbitrations under the ICC, AAA/ICDR and
CANACO Rules and is familiar with investment arbitrations under the ICSID Rules.
He is also an expert in Dispute Boards and other methods of solving disputes.
• Counsel to an international energy company in the implementation and
operation of Dispute Boards in diverse projects.
• Reviewed hundreds of decisions from an Independent Expert (issued following
the procedures of a Dispute Board) and counseled major Oil & Gas company
regarding same.
• Co-lead counsel to a U.S. company in a title insurance dispute regarding a large
project in Mexico.
• Co-lead counsel to a Mexican public corporation in one of the largest
international construction arbitrations in Latin America involving claims of
more than one billion dollars in an oil and gas project in Mexico (ICC, Mexico,
Spanish).
• Co-lead counsel to a major shipping company in an arbitration related to a
stock purchase agreement (ICC, New York, English).
• Participated in the representation of a U.S. company in insurance litigation
before Mexican courts regarding damages to a major beach resort resulting
from hurricane Wilma.
• Participated in the representation of a U.S. company in a multimillion-dollar
arbitration of corporate disputes against its Mexican counterparts (AAA,
Mexico, English).
• Represented a U.S. corporation in maritime insurance claims regarding
damages suffered by a vessel in a Mexican port.
• Represented U.S. corporation's diverse administrative and amparo lawsuits
before federal courts in Mexico, challenging the restrictions imposed by the
Mexican government on the importation of corn and fructose, on the basis that
such measures were in violation of NAFTA and GATT.
• Participated in the representation of a U.S. company (major participant in the
transportation and maritime terminals business in the U.S. and Mexico)
S ALVA DOR F ONSECA
against their Mexican partners in a joint venture company in several commercial lawsuits regarding the
validity of various corporate acts.
• Collaborated in the representation of an American franchisor against its Mexican counterpart in a $10
million plus international arbitration (AAA, Mexico, English).
• Obtained a favorable ruling for an international chemical company that had been sanctioned with the
largest fine imposed at the time by the Federal Competition Commission in a case of first impression for
both the Mexican Federal Competition Commission and Mexican courts.
• Represented a major participant in the U.S. market of bottled beer in several amparo lawsuits before
federal courts in connection with an antitrust investigation in Mexico.
• Obtained the recognition and enforcement of several U.S. judgments in Mexico in an application of the
Hague Convention. Also took part in the preparation and conduction of U.S.-style deposition of a hostile
witness before a Civil Court in Mexico City in aid of a U.S. court and applying the Hague Convention on
the Taking of Evidence Abroad in Civil or Commercial Matters.
• Participated in the negotiation of a settlement in a multimillion-dollar dispute between a Mexican
investor and the Government of the Dominican Republic.
Mr. Fonseca is a member of the Mexican Bar Association. He has also acted as a professor at the Universidad
Panamericana and the School of Law of the Centro de Investigación y Docencia Económicas A.C. (CIDE) in the
subjects of arbitration and civil procedure law.
Publications
• "Commentary on the Convention Between Mexico and Spain Regarding the Recognition and Enforcement
of Judgments and Arbitral Awards," Spain Arbitration Review, March 2008
• "Dispute Resolution Clauses in PFI Contracts," CANACO Arbitration Bulletin, September 2007
• "Mexico: Courts Take Pro-Arbitration Stance," Global Arbitration Review, 2007
• "Arbitration in Mexico," (co-author), Arbitration of the Americas 2007, November 2006
• "The Deliberative Sessions of the Collegiate Circuit Courts Should be Public," Legal Certainty: Diagnosis
and Proposals, Mexican Bar Association, Themis, 2006
• "Requirements of an Appeal to be Admitted in Mexico," The search of a Constitutional Theory, Mexican Bar
Association, Themis, 2005
• "Economical Analysis of the Law," Academic Gazette of the University of Guadalajara, 1998
• "The Revocation Remedy in Customs Law and the Jurisprudence of the Supreme Court of Justice," in lure.
University of Guadalajara, 1996
Speeches and Events
• "Criteria for Selecting Arbitrators," (moderator), Regional Course on Arbitration as a Mechanism for
Solving Commercial Controversies in Central America, Guatemala City, Guatemala, August 20, 2008
• "Regional Course for Arbitrators under the Central American Trade Dispute Settlement Mechanism,"
Secretariat for Central American Economic Integration, Guatemala, Guatemala, August 2008
• "The 2008 International ADR Reporting Program Series & An International Arbitration Round Table,"
(moderator), ICDR-CAM, Santiago, Chile, August 2008
• "Arbitration with State-owned Companies," ICC YAF, Mexico City, Mexico, August 2008
• Judicial Precedents regarding the appropriate time to request the remission of the parties to arbitration,
Mexico City, Mexico, June 2008
14
S ALVA DOR F ONSECA
• ICDR-CANACO Arbitration Conference, Mexico City, Mexico, June 2008
• "Judicial Precedents Regarding the Appropriate Time to Request the Remission of the Parties to
Arbitration," June 2008
• Drafting of Arbitral Clauses Workshop, Arbitration Center of Mexico-BMA-ITESM, Mexico City, Mexico,
May 2008
• Course on Commercial Arbitration, Mexico City, Mexico, April-October 2008
• "Dispute Resolution in Construction and Infrastructure Projects," Arbitration Center of Mexico-ITESM,
Mexico City, Mexico, April 2008
• ICDR North America Dispute Resolution Series: ADR after NAFTA, Chicago, Illinois, April 2008
• Arbitration Workshop, Graduate Division of the Universidad Panamericana School of Law, Mexico City,
Mexico, October 2007
• "Foreclosure of Security Trusts in Mexico," Universidad Panamericana, Mexico City, Mexico, August 2007
• "Practical Considerations for Cross-Examination in Arbitration," IABA Congress, Mexico City, Mexico, June
2007
• "Enforcement and Vacatur of Arbitral Awards," CANACO Arbitration Symposium, Mexico City, Mexico,
March 2007
• Drafting of Arbitral Clauses Workshop, Arbitration Center of Mexico-BMA-ITESM, Mexico City, Mexico,
March 2007
• Mexican Bar (BMA) Annual Congress, Campeche, Mexico, February 2007
• "Young Litigator's Forum: Global Perspectives on Discovery - A World of Difference," IBA Conference,
Chicago, Illinois, September 2006
• Ninth National Congress of the Mexican Bar Association, Monterrey, Mexico, October 2005
• International Commercial Arbitration Conference, University of Guadalajara School of Law, Gaudalajara,
Mexico, March 2005
• "Winning Your Case. Strategies for Large, Mid and Small Size Corporations," National Association of
Corporate Attorneys, October 2003
Education
Universidad de Guadalajara, law degree, with honors, 1995
Panamerican University, postgraduate studies, 1998
New York University School of Law, LL.M., Graduate Editor, The Journal of International Law and Politics, 2000
15
S ERGIO R ODRIGUEZ L ABASTIDA
ASSOCIATE
Paseo de Tamarindos
No. 400-B Piso 22
México D.F. 05120
Mexico
tel +52 (55) 3000-0648
fax +52 (55) 3000-0698
online www.chadbourne.com/srodriguez
Practice Areas
Arbitration and ADR
Litigation
Special Investigations and
Government Enforcement
Industries
Technology
Energy
Food and Beverages
Pharmaceuticals
Transportation
Regions
Latin America
Admissions
2002 Mexico
Languages
English
French
Spanish
Mr. Rodriguez's practice focuses on litigation and dispute resolution with an
emphasis on civil, commercial and administrative litigation and international
commercial arbitration.
• Participated in the representation of a U.S. company in insurance litigation
before Mexican courts regarding damages to a major beach resort resulting
from hurricane Wilma.
• Obtained compensation relief sought in commercial proceedings involving the
production of one of Mexico's highest rated sports radio shows.
• Successfully represented a U.S. corporation in a real estate dispute regarding
the possession of industrial facilities.
• Conducted pro-active FCPA corporate compliance review in Mexico for a major
pharmaceutical company.
• Supervised team of 12 document reviewers for internal investigation of
potential corrupt practices in violation of company policy (and potentially of
FCPA and Mexican anti-bribery laws).
• Collaborated in the successful defense of a leading U.S. corporation in a $10
million plus international arbitration (AAA, Mexico, English) in the fast food
franchise industry.
• Successfully defended U.S. and Mexican corporations of the mineral industry in
a $29 million commercial litigation regarding the validity and enforcement of
distributors agreement.
• Participated in a successful application of the Hague Convention and obtained
recognition and enforcement of several U.S. judgments in Mexico.
• Participated in the preparation and conduction of a deposition of a hostile
witness before a Civil Court in Mexico City in aid of a U.S. Court proceeding
related to an SEC investigation in application of the Hague Convention on the
Taking of Evidence Abroad in Civil or Commercial Matters.
• Successfully defended a database corporation in a commercial litigation
matter involving the enforcement of a services agreement and civil damages.
• Represented corporations in amparo and administrative proceedings against
the Mexican government due to its unlawful acts against concessionaries of
public services.
S ERGIO R O DRIGUE Z L ABASTIDA
Mr. Rodriguez is a member of the Mexican Bar Association, the Chartered Institute of Arbitrators (MCIArb),
the Young International Arbitration Group of the London Court of International Arbitration, and the
Advisory Council to the Legal Studies Division of the Centre for Economic Research and Education (CIDE).
Mr. Rodríguez has also lectured in the subjects of arbitration and civil procedure law at the Universidad
Panamericana and the School of Law of the Centro de Investigación y Docencia Económicas A.C. (CIDE).
Education
Universidad Nacional Autónoma de México, LL.B., with honors, 2001
Panamerican University, postgraduate diploma, 2001
London School of Economics and Political Science, LL.M., 2005
17
Articles
NY1 - 223145.01
TABLE OF CONTENTS
I.
OVERVIEW ............................................................................................................................................................................... 1
II.
The FORMER LAW: THE LQSP............................................................................................................................................. 1
III.
THE NEW LAW: LCM............................................................................................................................................................. 2
IV.
OVERVIEW OF LCM PROCEDURE ...................................................................................................................................... 3
A.
Eligibility to File......................................................................................................................................................... 3
B.
Venue ............................................................................................................................................................................. 3
C.
Parties ............................................................................................................................................................................ 4
D. The Three Phases of the LCM.................................................................................................................................. 6
V.
ADMINISTRATION OF THE COMPANY DURING PROCEEDINGS...........................................................................12
VI.
THE BANKRUPTCY ESTATE ................................................................................................................................................13
A.
Property.......................................................................................................................................................................13
B.
Executory Contracts................................................................................................................................................13
C.
Stay of Proceedings..................................................................................................................................................14
D. Pending Litigation ...................................................................................................................................................14
E.
Effect on Pre-Petition Security Interests .........................................................................................................14
VII.
DETERMINATION OF CLAIMS AND DISTRIBUTION..................................................................................................15
A.
Introduction ..............................................................................................................................................................15
B.
Filing of claims ..........................................................................................................................................................15
C.
Provisional List ..........................................................................................................................................................15
D. Final List and Order of Recognition, Ranking and Preference of Claims...............................................16
E.
Setoff.............................................................................................................................................................................16
VIII.
SELECTED PRACTICE ISSUES.............................................................................................................................................16
A.
Use, Sale or Lease of Property of the Estate in the Ordinary Course of Business ..............................16
B.
Use of Cash Collateral.............................................................................................................................................16
C.
Equitable Subordination......................................................................................................................................17
D. Fraudulent Conveyances ......................................................................................................................................17
E.
Preferences.................................................................................................................................................................17
F.
Substantive Consolidation ..................................................................................................................................17
G. Director and Officer Liability...............................................................................................................................17
APPENDIX SPANISH – ENGLISH TERMS ........................................................................................................................................19
I.
OVERVIEW
This guide is a summary of the major provisions of Mexican bankruptcy law, which is
formally known as the Ley de Concursos Mercantiles (the “LCM”). The LCM became effective in May
2000 and replaced the Ley de Quiebras y Suspensión de Pagos (the “LQSP”), which had been in force
in Mexico since 1943. The general consensus among practitioners is that the LCM is a significant
improvement over the LQSP and provides for a transparent and orderly process to address claims
against a debtor in Mexico.
In this guide, you will find:
•
a brief discussion of the LQSP;
•
a description of the basic bankruptcy system under the LCM, the requirements for
filing and the main participants in the proceeding; and
•
a breakdown of a typical case into its three phases: the reorganization trial, the
conciliation and the bankruptcy.
This guide also addresses the recent amendments to the LCM that were enacted in late
December 2007 and briefly discusses selected practice issues that are frequently raised by
bankruptcy practitioners.
II.
THE FORMER LAW: THE LQSP
The former law, the LQSP, reflected an adversarial approach to debt recovery focused on
liquidation rather than reorganization. In general, under the former law, there were two
alternatives: (1) Suspension of Payments (Suspensión de Pagos), or (2) a “liquidation” (Quiebra).
Under the LQSP, only a debtor could begin a proceeding by requesting a Suspension of
Payments and there was no concept of an involuntary proceeding. A debtor’s request for a
Suspension of Payments was accompanied by a proposed plan to pay claims similar to a plan of
reorganization under Chapter 11 of the United States Bankruptcy Code. A plan under the LQSP
could only be implemented if creditors approved it. If the debtor failed to reach an agreement with
its creditors to restructure or satisfy outstanding debt, the judge appointed to oversee the
Suspension of Payments would declare the debtor bankrupt and begin the “preventive
agreement” (Convenio Preventivo) stage of the process. There was no time limit for the debtor to
reach an agreement with creditors and, accordingly, cases could remain unresolved for years.
During the Suspension of Payments phase, creditors could not seek to enforce their claims and
interest ceased to accrue on claims.
Each case commenced under the LQSP was assigned to a special bankruptcy judge selected
by a lottery system from a pool of judges. Under the LQSP, a bankruptcy judge was responsible for,
among other things, administering all of the debtor’s assets and summoning creditors for
meetings. A bankruptcy judge had broad discretion and powers to coordinate both the Suspension
of Payments, the preventive agreement stage and, ultimately, if no preventive agreement was
reached, the liquidation process.
In order to assist the bankruptcy judge in the process, the Chamber of Commerce to which
the debtor belonged acted as a Trustee. In addition, a creditors’ committee was appointed to
represent the interests of creditors and monitor the Trustee and the administration of the
company.
GUIDE TO MEXICAN BANKRUPTCY LAW
Under the LQSP, the Trustee, had significant power and could appoint one or more
delegates to assist in the administration of the case. In general, the Trustee’s role was to take
possession of the debtor and its assets, take an inventory of the estate, prepare the provisional list
of creditors, collect receivables, file a report on possible claims of the estate (e.g., preferences, and
fraudulent conveyances) and make a determination for the bankruptcy judge as to whether it was
possible for the debtor to continue as a going concern. The Trustee could also negotiate an
agreement among creditors and bind the debtor to such an agreement.
Upon the commencement of the Suspension of Payments phase or shortly thereafter, the
bankruptcy judge presiding over the case would convene the “Creditors Assembly” (Junta de
Acreedores). Only creditors whose claims had been approved by the Trustee and a committee of
creditors were allowed to attend. The purpose of the Creditors Assembly was to review each claim
from the list prepared by the Trustee, before submitting that list to the judge for a decision
whether to recognize the claim in the bankruptcy judge’s Order of Recognition, Ranking and
Preference of Claims.
The LQSP was significantly flawed for several reasons. First, the proceedings were
extremely slow and lengthy because all contested claims were consolidated and heard by the same
bankruptcy judge. Second, the bankruptcy judge was responsible for making all of the debtor’s
decisions, including financial decisions, many of which the judge was unqualified to make, even
after consultation with the Trustee. Third, and most significantly, debtors had an incentive to
continue a Suspension of Payments for as long as possible, while competitors were required to
continue paying all of their debts, thereby creating a competitive advantage for debtors.
III.
THE NEW LAW: LCM
Paving the way for enactment of the LCM were the substantial social and economic changes
in Mexico since enactment of the LQSP in 1943. Mexican companies entered the international
marketplace and began to list on stock exchanges abroad in the intervening 58 years. Moreover,
Mexico’s economy opened to foreign companies through entry into numerous free trade
agreements (e.g., NAFTA). As a result, the LQSP simply became too antiquated to deal with Mexico’s
modern reality and the expectations of institutional investors. The LQSP did not allow efficient
reorganization of profitable businesses and artificially propped up loss-making enterprises at the
expense of the public and otherwise healthy competitors. In addition, Mexican authorities began
to realize the importance of business in sustaining Mexico’s economy and recognized the need to
safeguard these businesses from outright liquidation.
Recognizing the deficiencies in the LQSP, in November 1999 a group of senators proposed
the LCM. After a few modifications by the House of Representatives in April 2000, the LCM became
effective upon being published in the Federal Official Gazette (Diario Oficial de la Federación or
“DOF”) on May 12, 2000.
In a shift away from the old adversarial system embodied in the LQSP, the LCM is designed
to foster cooperation and agreement. Whereas under the LQSP the inevitable result was either a
lengthy Suspension of Payments or liquidation, the LCM focuses more on reorganization and
involves court-appointed officials in that process from the beginning. Only if this process -- called
the “Conciliation” (Conciliación) -- fails does the debtor enter into liquidation.
Under the LQSP, each case was assigned to a specialized bankruptcy judge. Under the LCM,
each case is assigned to a civil judge, who will be assisted by specialists appointed by the Federal
2
Institute of Reorganization Specialists (Instituto Federal de Especialistas de Concursos Mercantiles
(“IFECOM”)), which was created for the sole purpose of guiding civil judges through the bankruptcy
process.
In general, a case under the LCM has three phases: (i) “Reorganization Trial” (Juicio de
Concurso); (ii) “Reorganization” and, if no Reorganization is implemented, (iii) “Liquidation.” A civil
judge (with guidance from specialists appointed by IFECOM) oversees these three phases from the
beginning.
IV.
OVERVIEW OF LCM PROCEDURE
A.
Eligibility to File
A case under the LCM may be commenced by (i) the debtor, (ii) a creditor or (iii) the
Attorney General (Ministerio Público). Under the LCM, a debtor is deemed to have “generally
defaulted on its payment obligations” if:
(1)
a payment default has occurred with respect to the claims of at least two creditors;
(2)
payments are past due for more than 30 days and represent 35% or more of all the
debtor’s payment obligations as of the date of the filing; and/or
(3)
the debtor does not have liquid assets (namely, cash deposits, short-term
securities, and accounts receivable) to pay at least 80% of the obligations past due
as of the date of the filing.
A debtor may commence a voluntary reorganization proceeding under the LCM if it
satisfies condition (1) and either (2) or (3). A creditor, whether unsecured or privileged, or the
Attorney General can file an involuntary reorganization proceeding under the LCM only if all three
conditions are satisfied. Under the LCM, eligibility is presumed when the debtor does not have
sufficient assets to attach after a default, there are no persons with authority present, or where the
court determines that the debtor is fraudulently conveying its assets to avoid the payment of
obligations. Nevertheless, if a creditor commences an involuntary proceeding and is unable to
demonstrate that all three conditions have been fulfilled, it must pay all attorneys’ fees and other
expenses incurred by the debtor in accordance with the court’s discretionary ruling.
In general, foreign companies may not be subject to bankruptcy proceedings in Mexico. The
LCM, however, does allow for the reorganization of branches and subsidiaries of foreign companies.
The LCM also permits the recognition of foreign proceedings under “Titulo XII,” which like Chapter
15 of the U.S. Bankruptcy Code is based on the UNCITRAL Model Law on Cross-Border Insolvency.
Indeed, Mexico was one of the first countries to adopt the Model Law.
B.
Venue
A proceeding under the LCM must be initiated before the civil judge where the debtor is
domiciled (i.e., where it operates). Typically, a company’s domicile is stated in its articles of
incorporation (estatutos).
3
C.
Parties
The De btor
Under the LCM, “merchants” are eligible to file for reorganization. Article 3 of the
Commercial Code defines merchants as: (i) persons with legal capacity to engage in commerce; (ii)
corporations incorporated in accordance with the commercial laws; and (iii) foreign corporations,
and their agencies or branches that engage in commerce within a Mexican territory. In addition, a
trust whose main purpose is the conduct or facilitation of business may also be eligible for
reorganization. The partners of general partnerships and general partners of limited partnerships
can also be subject to reorganization proceedings. Limited partners of a limited partnership cannot
be forced into a bankruptcy of the partnership.
Special provisions govern the reorganization of public service companies, such as banks and
other financial institutions or bonded warehouses. While these special provisions are beyond the
scope of this guide, the agency responsible for overseeing such public service companies has the
right to commence a case and to direct IFECOM to appoint the specialists ordinarily appointed in
IFECOM’s discretion. For example, the National Banking and Securities Commission (Comisión
Nacional Bancaria y de Valores) has commenced cases against Arbitraje Casa de Cambio S.A. de C.V.
and Crédito y Ahorro del Noreste, Sociedad de Ahorro y Préstamo.
As in the United States, insurance companies are also subject to special insolvency laws
(Ley General de Instituciones y Sociedades Mutualistas de Seguros (“LGISMS”)) and may not file under
the LCM. For example, only the Finance Ministry (Secretaría de Hacienda y Crédito Público) can
request the reorganization of an insurance company, and neither the insurance company itself or
any of its creditor cans commence a reorganization proceeding.
The reorganization proceedings of affiliated companies are generally consolidated for
administrative purposes and share the same index number. Thus, all pleadings related to
consolidated cases are stored in the courthouse in binders under the same index number.
Credi tor s
Creditors must file proofs of claim using the form provided by IFECOM. Only “recognized”
creditors may participate in plan negotiations. Recognized creditors are those listed in the Order of
Recognition, Ranking and Preference of Claims, discussed below.
Judge
A case under the LCM will be assigned to a district judge, which is a federal judge, at the
debtor’s domicile or where its principal place of business is located and this judge oversees the
reorganization and bankruptcy proceedings. Unlike in the United States, there are no special
bankruptcy courts in Mexico. IFECOM, however, trains and appoints specialists to assist the judge
throughout the process.
IFECO M
IFECOM is an arm of the judicial branch of the federal government. Its role is similar to that
of the Office of United States Trustee in the United States. IFECOM maintains lists of people
approved to act as specialists -- Auditors, Conciliators or Trustees -- in reorganization proceedings.
IFECOM sets the fees to be paid to specialists and monitors their work. IFECOM also provides
4
continuing education to specialists, judges and lawyers, publishes statistics on proceedings, issues
rules and forms, and acts as mediator between a debtor and its creditors when asked. Recent
amendments to the LCM have increased IFECOM’s powers by allowing it to, among other things,
respond directly to questions posed by judicial authorities.
Under the LCM, potential debtors can mediate disputes with its creditors through IFECOM
before filing for bankruptcy. Likewise, any creditor with a claim against a debtor may also seek
mediation through IFECOM.
Spe ci alist s (E speci alis tas)
There are three types of specialists in bankruptcy proceedings under the LCM:
•
Au ditor. After a district judge has approved a valid request for reorganization, the
judge gives notice to IFECOM, which then appoints an “Auditor” (visitador) to review
the debtor’s books to determine whether the debtor is eligible for reorganization.
•
Conciliator. The Conciliator (conciliador) is appointed by IFECOM after a district
judge gives notice that the conciliation phase of the proceeding has begun. The
Conciliator acts as mediator between the debtor and its creditors and is responsible
for preparing a reorganization plan. In addition, the Conciliator monitors the
administration of the company and presents the list of creditors to the judge. The
Conciliator may also be authorized to operate the business under certain
circumstances, much like an operating trustee in the United States.
•
Truste e. The Trustee (síndico) is appointed in the same manner as the other two
specialists when the judge gives notice to IFECOM that the liquidation phase has
begun. The Trustee is entrusted with selling the assets of the estate in the event
conciliation fails and the case proceeds to liquidation. It is not uncommon for the
Trustee to be the same person designated as Conciliator.
Prior to the recent amendments, the fees of the specialists were paid from the debtor’s
estate. Such fees were entitled to a priority, but were only paid after labor claims. Indeed,
specialists had to initiate ancillary proceedings (Incidente de liquidación de honorarios) by which
they filed a report detailing the hourly activities performed by the specialists and their assistants.
The parties then had the opportunity to object to the report, after which the judge determined the
amount to be paid.
Now, specialists are paid an hourly fee based on schedules prepared by IFECOM. Payment
of the specialists fees and expenses are provided for in the reorganization plan as ordinary
company expenses. If a reorganization proceeding winds up in liquidation, the specialist’s fees and
expenses are paid from the estate at the end of the liquidation proceeding.
Specialists in Mexican proceedings must be bonded to guarantee their performance in an
amount determined by IFECOM. To date, according to IFECOM, no claims have ever been filed
against specialists by any party and, as a result, their bonds have never been called upon.
In addition, specialists are required to keep information they obtain during their tenure
confidential and are liable for any damages caused by unlawful disclosure.
Contr oller s
Controllers (Interventores) represent the interests of creditors in a proceeding under the
LCM and act much like an official committee of unsecured creditors in a United States bankruptcy
5
case. They act as “watchdogs” and oversee the Conciliator and the Trustee to ensure they perform
their duties properly. A Controller may be appointed by the court only upon the request of a
creditor or group of creditors representing at least ten percent of the total amount of the debtor’s
indebtedness has the right to request the appointment of a Controller. Accordingly, there may be
up to ten Controllers.
Controllers have the authority to request information from the Conciliator relating to the
debtor and the management of its business. Their fees are paid by the appointing creditor or group
of creditors, which reflects a significant departure from the United States system, where the fees of
creditors’ committee and their professional advisors are paid by the debtor’s estate.
D.
The Three Phases of the LCM
The process under the LCM involves three stages: the reorganization trial; the conciliation;
and if no reorganization is implemented, the liquidation. In the first stage (juicio de concurso), the
district judge, with the aid of the Auditor, reviews whether the eligibility requirements are met by
the debtor, and issues the Order for Relief or denies the request. In the second “conciliation” phase
(conciliación), the Conciliator must determine who the creditors are and acts as a mediator
between the debtor and its creditors in order to formulate a reorganization plan. Finally, if no plan
is reached and the case proceeds to a liquidation, the Trustee must sell the assets and pay creditors.
Each of these phases is described in more detail below.
Phase 1: Reorganization Trial
Com men cem ent
Cases under the LCM are commenced by the filing of a claim or a request for reorganization.
The debtor itself, any creditor, or the Attorney General can file a claim, which is similar to a
complaint commencing a lawsuit in the United States If a creditor commences the case, it files a
Demanda; in a voluntary case, the debtor files a Solicitud.
Unlike in the United States, where most cases are filed by debtors, nearly half of all
proceedings in Mexico are commenced by creditors. When a creditor commences a proceeding, it
must include proof of its claim and whatever documents are necessary to determine whether the
debtor is eligible for relief. Again, unlike in the United States, where a contested involuntary
petition may involve a lengthy trial with live testimony, the reorganization trial under the LCM is
conducted entirely through pleadings, except in unusual circumstances.
As part of its request to commence a proceeding, a creditor may seek preliminary relief
aimed at avoiding disrupting the debtor. Unlike in the United States where the automatic stay
arises upon the filing of the petition with the court, there is no moratorium enjoining creditors
from taking actions against the debtor in Mexico until an Order for Relief is entered. Thus, a
creditor may ask for a temporary restraining order preventing collection efforts against the debtor
until the court determines whether the debtor is eligible for reorganization.
After the request for bankruptcy is filed, the judge presiding over the case will direct that
process be served on creditors and/or the debtor, depending on who commenced the case. Service
of process, unlike in the United States, must be completed by a court clerk (as opposed to any
private individual). Typically, process is served in one or two days by courier. Once served with
process, the creditor and/or debtor then has nine days to respond and the commencing party has
6
three days to file a rebuttal. If more than documents (i.e., testimony and/or an expert report) are
required, then the judge will establish an evidentiary process that cannot last longer than 30 days.
It is interesting to note that when the LCM was first enacted, a creditor seeking
involuntary reorganization had to post a bond with the court. In October 2006, however, the
Supreme Court declared that requiring creditors to post a bond to initiate reorganization
proceedings was unconstitutional, ruling that justice should be “free of charge.”
Eligibili ty Re vie w by the Audi t or
Simultaneously with the filing of the claim for reorganization, the judge will notify
IFECOM and request the appointment of an Auditor. A petition for reorganization filed under the
LCM initiates an “auditing” process in which the Auditor performs an “eligibility review” of the
debtor’s books and records to determine if the company is eligible for reorganization, including
whether the debtor is insolvent. Once the answer to the petition is filed, the Auditor will begin its
eligibility review, which is completed upon the filing of a final report. If the Auditor determines
that the debtor has generally defaulted on its payment obligations within the meaning of the LCM,
the district judge will issue an “Order for Relief.” In the final report, the Auditor may also suggest,
and the judge may order, certain protective measures. The final report must be issued no later
than 15 days after the answer is filed, although the judge may grant the Auditor one 15-day
extension under exceptional circumstances. If a debtor refuses to cooperate with the Auditor’s
eligibility review, the Auditor may ask the judge to enter an Order for Relief.
Order f or Relief
Once the Auditor’s final report has been filed, creditors, the debtor, and the Attorney
General are allowed to review it and file any request for modification and submit any evidence
they deem appropriate within ten days. Within five days after the last request, the judge decides
whether entry of an Order for Relief is appropriate. The judge is not bound by the Auditor’s final
report and there have been instances where the debtor convinced a judge that its liquid assets
were sufficient to pay debts and that an Order for Relief should not be entered.
The effects of the Order for Relief are:
•
IFECOM is instructed to appoint a Conciliator, who takes possession of the debtor’s
books and records.
•
Known creditors are served with the Order for Relief and unknown creditors are
notified by publication by the Conciliator in a newspaper and the DOF.
•
The debtor is ordered to cease all payments of its debts, except those necessary for
regular operation of the company. This reflects a difference from the United States
system, where a debtor cannot pay without bankruptcy court approval any debts that
arose prior to commencement of the United States case, even those debts owing to
vendors deemed critical to the debtor’s on-going operations necessary to run the
company.
•
Much like in a United States case, entry of an Order for Relief automatically stays all
collection efforts by creditors (but not necessarily all lawsuits).
Prior to the recent amendments, the Order for Relief also prevented the debtor, or in the
case of a corporation, those in charge of the corporation, from leaving the jurisdiction without
designating a person with authority to act on behalf of the debtor. Now, if a debtor requests its
7
own reorganization, the Order for Relief may not prevent the debtor or its managers from leaving
the jurisdiction.
Regardless of the Auditor’s final report, the judge may declare the debtor not eligible for
reorganization and refuse to enter an Order for Relief. In that case, the requesting party originally
seeking an order will be required to pay the fees and expenses incurred during the process. Only
the debtor, the Auditor, the creditors that commenced the process or the Attorney General may
appeal denial of an Order for Relief.
Phase 2: Conciliation
Gener al
The purpose of conciliation is to preserve the company’s operations while the parties
attempt to negotiate and draft a consensual reorganization plan. The Conciliator facilitates this
process.
Timin g/Pr oce dure
The conciliation period lasts 185 days and may be extended for two 90-day periods under
exceptional circumstances. The Conciliator or the creditors representing two-thirds of the amount
of the recognized claims may request the first 90-day extension if they reasonably believe a
reorganization plan is achievable. The second 90-day extension must be sought by both the debtor
and 90% of recognized creditors. In no event may the conciliation last more than 365 days.
During the conciliation phase, the Conciliator must publish notice of the deadline by
which creditors must file proofs of their claims (i.e., the bar date). Notice must be published in the
DOF and in a local newspaper in the district where the proceeding is pending. The Conciliator is
also charged with processing and reviewing proofs of claim and serving as a mediator between the
debtor and its creditors, as well as with the actual drafting and the submission of lists of creditors
and the reorganization plan. The Conciliator must also file a progress report every two months
setting forth the work it has performed and the results of its efforts to facilitate a reorganization
plan.
Re or gani zati on Pl an
Once the Court publishes the list of recognized claims, the Conciliator is required to
attempt to reach an agreement with the debtor and holders of recognized claims on a plan of
reorganization. If the Conciliator believes that the debtor and a majority of holders of recognized
claims support a plan of reorganization for the debtor, it must circulate the plan to all holders of
recognized claims. Such holders will have ten business days to comment on the plan.
Plan
The plan must provide for the payment of the following:
•
Qua lifie d la bor cla ims. Salaries earned within the two year period prior to the entry of
the Order for Relief, plus any severance pay;
•
Claims rel ate d to the a dmi nistratio n of th e esta te. Expenses incurred in the
administration of the proceeding including attorneys’ fees;
8
•
Sp ecialist s’ f ees a nd ex pe ns es. The fees and expenses charged by the Auditor,
Conciliator, Trustee and their assistants in the performance of their duties;
•
Sing ularly p rivi lege d cre ditors . Funeral expenses and medical expenses incurred
with respect to illness leading to death, when the debtor is a natural person;
•
Se cur e d cr edito rs. Creditors with a mortgage, pledge or other security agreement
covering property of the debtor. Under Mexican law, security interests must be properly
registered or they will be avoided. Secured creditors’ claims are satisfied out of the
collateral to the extent of the collateral’s value. If the claim is greater than the value of the
collateral, the resulting deficiency claim is considered an unsecured claim;
•
Labor an d u nse cure d tax clai ms. Claims that do not fall into any of the previous
categories, (i.e., unsecured tax claims or labor claims which are not qualified labor claims);
•
Crr ed itors with a s pe cial priv ileg e. Certain creditors have a special statutory privilege
1
and have a “right to withhold.” These creditors have rights that are similar to those of
secured creditors; and
•
Gene ral un se cure d cr e ditors . Finally, any creditor that does not fit into one of the
foregoing categories is considered an unsecured creditor. Unsecured creditors come last in
line just before equity interests and are paid only if all senior classes of creditors are paid
in full.
A reorganization plan may provide for the sale of the debtor as an ongoing business.
If the plan provides for an increase in capital stock, the Conciliator must give notice to
existing shareholders so they can exercise any preemptive rights they may have. If existing
shareholders waive such preemptive rights, any person, including the claim holders may
participate in the capital stock increase. As part of the reorganization plan, the claim holders and
the debtor can agree to capitalize debt.
Prene goti ated De al s
Before the recent amendments to the LCM, a reorganization plan could not be filed at the
same time as the petition for relief. In other words, there was no provision for “pre-packaged”
plans. Interested parties, however, were free to negotiate outside of the proceeding at all times and
the reorganization plan could be filed as soon as the Order of Recognition, Ranking and Preference of
Claims was entered.
The recently passed amendments, however, include a new Title XIV which allows a debtor
to file, simultaneously with its petition, a prenegotiated plan of reorganization signed by the
holders of at least 40% of its debt. Under those circumstances, (i) the judge will issue an Order for
Relief without the appointment of an Auditor, thereby expediting the effectuation of the stay
enjoining creditors’ actions, and (ii) the Conciliator must consider the prenegotiated plan before
negotiating any other plan.
1
The following are examples of right to withhold. A buyer under an installment contract has a right to withhold payment
of the price if the possession of the purchased good is threatened. A debtor has a right to withhold payment to a
creditor if the creditor's claim has been attached by a third party and notice was given to the debtor. A hotel has a right
to withhold the luggage of a guest that left without paying.
9
Appr oval of the Re or gani zati on Pl an by the Cre di tor s
If the Conciliator believes that enough creditors will vote in favor of the plan, he will
submit it to the holders of recognized claims for a ten-day period so that they may comment on or
execute it. The Conciliator must attach to the plan a clear summary of its terms. Both the proposed
plan and the summary must be submitted using the form provided by IFECOM.
In order for a plan to be approved by the court, it must be agreed to by (i)the debtor and
(ii)holders of recognized claims holding (a)more than 50% of the total recognized amount of
unsecured claims, and (b)more than 50% of the total recognized amount of secured claims, claims
having a special privilege under Mexican law. In general, a plan will be deemed accepted by all
unsecured claim holders if it provides for the payment of the entire amount of their claims,
2
converted into UDIs.
With respect to creditors that do not agree to the terms of the plan, the plan must provide
for minimum protections with respect to the discount and payment period of claims. In particular,
the LCM provides that a dissenting creditor should be treated no worse than any 30% of the
recognized unsecured creditors that did sign the plan. It remains to be seen, however, how a court
will ensure these protections.
Within seven days after the expiration of the ten-day period, the Conciliator must submit
the plan to the judge, signed by the debtor and by the required majority of recognized claim
holders. The judge then must make the plan and the summary available to all recognized claim
holders for five days, so that they may file any objections.
Order A ppr ovin g the Re organiz ati on Plan
Following the comment and objection period, the district judge may confirm the plan if it
meets all of the requirements of the LCM. Further, the district judge may refuse to approve the
plan if it is inconsistent with public policy.
Upon approval of the reorganization plan, the reorganization proceeding ends. The parties
involved in the proceeding are relieved of their duties and the Conciliator must cancel any
registration made on the public registers of the Order for Relief. The debtor, holders of recognized
claims, the Attorney General or the Conciliator may challenge the reorganization plan on the basis
that it has not satisfied all of the requirements of the LCM.
Barring a successful appeal, an approved reorganization plan binds the debtor and all
recognized creditors, even those who rejected the plan, provided that the plan sets forth: (a)
payment of the debt for the amount due on the date of the Order for Relief converted to UDIs, (b)
payment of all amounts that became due in accordance with the agreement from the date of the
Order for Relief to the date of approval of the reorganization plan, and (c) payment of the
obligations that become due after the approval of the reorganization plan.
2
UDIs are Unidades de Inversion, a measuring unit of constant value. Starting in April 1995, the Central Bank (Banco de
México) publishes the value of the UDI for each day of the month in the DOF. The UDI’s value increases or decreases
depending on Mexican inflation rates.
10
Dissen ting cre dit ors
Any recognized holder of a secured claim that did not approve of the reorganization plan
may commence or continue to foreclose on the collateral securing the claim, unless the plan
provides for the repayment of their claims, or the payment of the value of their collateral. If the
amount to be paid for the value of the collateral does not satisfy the entire claim, the deficiency
3
will be treated as an unsecured claim.
Discr eti on of the Ju dge
Under the LCM, the district judge controls the bankruptcy proceeding but the judge’s
discretion is limited to approval or disapproval of the reorganization plan filed by the Conciliator
and signed by the necessary majority of the claim holders. The judge may not unilaterally modify
the plan.
Phase 3: Liquidation
If a reorganization plan is not approved within the 365-day conciliation period, or if prior to
that time the Conciliator determines that a consensual plan is impossible, efforts at conciliation
terminate and the debtor is put into liquidation. Before the recent amendments to the LCM, once
the liquidation phase began, a case could never return to conciliation. Now, however, the LCM
allows a debtor and its creditors to negotiate a plan even after the liquidation phase has begun,
provided that the approval of all creditors is needed to implement such a plan or terminate the
proceedings.
Order f or Li qui dati on
The Order for Liquidation suspends the legal capacity of the debtor to manage its business,
including disposing of assets or performing under contracts. In a liquidation, IFECOM will either
appoint a Trustee or ask the Conciliator to act as Trustee with power to manage the debtor’s assets.
The Trustee must register the Order for Liquidation and publish a summary of it in the
DOF and in a newspaper in the district where the proceeding is pending. The debtor, any
recognized creditor, or the Conciliator may appeal the Order for Liquidation within nine days after
notice is given.
Sixty days after taking control of the debtor’s business, the Trustee must file a report on
the state of the debtor’s books, an inventory list, and a balance sheet listing all assets up to the date
of the appointment.
In a liquidation, all of the assets of the estate must be turned over to the Trustee and the
debtor is prohibited from making any payments or delivering any goods without the Trustee’s
authorization. Likewise, any entity that makes a payment to the debtor without the Trustee’s
consent risks having to pay twice.
3
The law suggests that the holder of such a deficiency claim would retain the right to initiate a collection proceeding
against the debtor for the unsatisfied balance if, at the end of the reorganization and liquidation proceeding, such claim
has not been fully satisfied. We are not aware whether any such proceeding has ever been instituted and it is unclear
how a court would resolve such a proceeding.
11
Liqui dation of the Es tate/ Au cti on Pr oce dures
Once the Order for Liquidation is entered, the Trustee must sell the debtor’s assets for the
highest price possible. The Trustee may consider selling the estate as an ongoing business or may
sell assets individually.
Although the Trustee may ask the district judge to establish different procedures, a
Trustee will generally sell the assets of the estate at a public auction. The notice for the auction
must be published at least twice in a newspaper in the district where the proceeding is pending.
The notice must contain the details of the auction, including when and where it will be held, a
detailed description of the assets being sold, any minimum bids and/or bidding increments, as
well as information concerning pre-auction inspection of the assets. The Trustee must send a copy
of the notice to IFECOM for publication on IFECOM’s website. The auction must take place not less
than 10 days and not more than 90 days after publication of the first notice.
Any person that is interested in bidding at an auction must file a bid in the specified
format in a sealed envelope with the district court presiding over the auction. Typically, the bid
must be accompanied by a certified check or bond that guarantees payment of the bid amount.
Any person that is “related” to the debtor may present a written bid, but may not otherwise
participate at the auction. A creditor is generally not a related entity and may bid and participate
at an auction. The LCM considers the following entities to be “related”: (i) family members of the
debtor’s or members of the board of directors or officers of the debtor; (ii) a member of the board of
directors of the debtor; (iii) shareholders holding at least 5% of the outstanding stock of the debtor;
or (iv) controlling shareholders of any corporation holding at least 5% of shares of the debtor.
At the designated time for the auction, the judge presiding over the case will open the
sealed envelopes and reveal the details of each bid. Bidders will then have the opportunity to
improve their bids, which will continue until the highest bidder is declared. When the auction is
finished, the judge will order the sale of the assets to the winning bidder, who will have ten days to
pay the bid amount, in cash. If no bids are received, the judge will declare the auction abandoned.
In general, creditors are paid out of the auction proceeds, subject to payment of certain
expenses described below, in the order set forth in section IV.D. Creditors with security interests in
the assets being auctioned are paid out of the collateral, subject only to the payment of qualified
labor claims. No payments will be made to one class of creditors until the class above it has been
fully satisfied in accordance with the priority set forth in the Order of Recognition, Ranking and
Preference of Claims. If there are not enough assets to satisfy all claims in a class, there will be a pro
rata distribution to the holders of claims within that class.
The Trustee must report to the Court on its progress in liquidating the estate every two
months. If any claims have been challenged, the Trustee must reserve the amounts that would
satisfy the challenged claim.
V.
Administration of the company during proceedings
Pending approval by the district judge that the debtor is eligible for relief, the operations
of the debtor continue unaffected by the request for such a determination. Once appointed, the
Auditor can request imposition of restraining orders. These restraining orders may include: (i) a
stay of any enforcement proceeding with respect to the debtor’s property; (ii) a prohibition against
the payment of pre-petition debts; (iii) a prohibition against the leveraging of any assets; (iv) the
attachment or seizure of the debtor’s assets; (v) the appointment of a person to control the
12
debtor’s cash;; and (vi) an order preventing the debtor (if a natural person) or the managers of the
debtor from leaving the jurisdiction.
Once the district judge rules that the debtor is eligible for reorganization, and the debtor
moves into the conciliation stage, the debtor (or its management) usually remains in control of its
operations under the supervision of the Conciliator and the Controller (if one was appointed). If the
Conciliator believes that the continuation of existing management is not in the best interests of
the estate and its creditors, it may request removal of management and may be authorized to
assume responsibility for managing the debtor. The LCM does not list specific grounds for removal,
although the statute is broad and leaves the decision to the discretion of the judge and the
Conciliator.
If reorganization is not possible or the case otherwise proceeds to liquidation, the
executive officers of the debtor are removed from control and the Trustee is appointed with the
broadest possible powers to run the debtor’s business. The Trustee must initiate the process in
order to take possession of the debtor’s assets promptly after appointment and must do everything
to maintain and secure such assets, including establishing a bank account controlled by the
Trustee. If the Trustee decides to operate the business while in liquidation, it may do so in the
same way that the debtor did before the reorganization.
VI.
THE BANKRUPTCY ESTATE
Much like in the United States, once the Order for Relief has been entered, an estate is
created. To determine the liabilities of the estate, all debts are treated as automatically accelerated
and any non-pecuniary obligations will be assigned a value. After the Order for Relief is entered,
and until the conciliation phase of the proceeding is complete, no order of attachment or auction of
the estate’s assets may be entered or enforced.
A.
Property
Where the debtor holds easily identified assets that belong to another party, those assets
may be separated from the estate. The following assets are considered easily identified and may be
separated from the estate: any property held by the debtor that is subject to a possessory claim;
and assets in possession of the debtor as bailee, trustee, consignee, etc. Property of the estate held
by third parties (other than secured creditors) must be turned over to the Trustee.
In Mexico, many financing transactions involve the creation of a trust (fideicomiso) into
which a debtor’s assets are transferred for the benefit of the creditors in that financing. Under
those circumstance, the debtor’s assets are legally outside the scope of the debtor’s estate.
However, because the debtor’s assets remain on the debtor’s books for accounting and tax
purposes, the bankruptcy of the debtor could result in challenges to the conveyance by third
parties based on discrepancy and favorable treatment of certain creditors. Indeed, parties involved
in such trusts should consider whether a court could conclude that a conveyance to such a trust is a
fraudulent transfer or preference, discussed below.
B.
Executory Contracts
The general rule is that executory contracts must be honored by the debtor, unless the
Conciliator rejects the contract. Even if the debtor or its management remains in control of the
business, the Conciliator is empowered to accept or reject executory contracts, incur new
indebtedness, substitute collateral and sell assets outside the regular course of business. If the
13
Conciliator decides to terminate a lease under which the debtor is the lessee, the lessor is entitled
to three months’ rent.
A non-debtor party to a contract may ask the Conciliator to decide if it will reject the
contract. If the Conciliator responds that it will not, then the debtor must honor the contract. If the
Conciliator states that it will reject the contract, or does not respond, the non-debtor party to the
contract may terminate it by giving notice to the Conciliator.
The LCM provides certain protections to sale contracts. Specifically, a seller is not bound to
deliver the goods or the real estate if the price has not been paid or a guarantee that it will be paid
has not been provided. Moreover, in the case of movable property that has not been paid for, when
the debtor/buyer commences a bankruptcy case prior to the delivery of goods, the seller may refuse
to deliver unless the purchase price has been paid in full.
Notwithstanding the general rule, the following contracts are automatically terminated
on the date the Order for Relief is issued: agreements to repurchase stock, stock loan agreements,
and agreements regarding futures, or financial derivative operations that become due after the
Order for Relief. Construction agreements (obra a precio alzado) will be also automatically
terminated by the bankruptcy of one of the parties, unless the parties and the Conciliator agree to
assume it.
C.
Stay of Proceedings
In a creditor-initiated case, the creditor seeking entry of an Order for Relief may also seek
from the court protective measures against the debtor, such as an order preventing the debtor’s
managers and directors from leaving the domicile or prohibiting the seizure of debtor’s assets. The
Auditor can also seek, prior to the Order for Relief, orders protecting the estate, including orders
prohibiting payment of debts, staying attachment or foreclosure proceedings, or preventing
further encumbrances.
Once the Order for Relief is entered, no foreclosure proceeding may be commenced or
continued and no attachment may take place. Creditors holding “labor claims” against the debtor,
however, may continue to pursue those claims even after the Order for Relief is entered, and labor
judges may order the attachment of assets to satisfy the last two years of salaries and certain other
employment-related obligations. Similarly, tax authorities may attach assets to secure their claims,
even after entry of the Order for Relief.
D.
Pending Litigation
All litigation initiated by or against the debtor that is still pending when the Order for
Relief is entered will not be consolidated with the bankruptcy proceeding. The debtor may
continue such litigation with the Conciliator’s approval. The continuance is subject, however, to the
Conciliator’s supervision and right to take over the litigation.
E.
Effect on Pre-Petition Security Interests
Under United States bankruptcy law, property acquired by the debtor after the filing of a
bankruptcy petition is generally not subject to liens resulting from prepetition security
agreements. There is no similar provision in the LCM and pre-petition liens may extend to property
acquired by the debtor after the Order for Relief has been entered.
14
VII.
DETERMINATION OF CLAIMS AND DISTRIBUTION
A.
Introduction
As discussed above, in order to determine the amount of claims against the debtor, all
debts are accelerated and, if the claims are subject to a condition precedent, the condition is
considered satisfied. If necessary, claims are converted to present value and obligations that are not
expressed by the payment of money are assigned a monetary value.
All unsecured claims cease to accrue interest and are converted into UDIs as of the date of
the Order for Relief, provided that an unsecured claim denominated in foreign currency is first
converted to pesos and then to UDIs. Claims denominated in UDIs are protected against Mexican
inflation.
In general, a secured claim will remain denominated in the original currency or unit of
measure and will continue to accrue interest to the extent the collateral is sufficient to satisfy the
secured claim. A plan under the LCM may provide for distributions in other currencies.
B.
Filing of claims
Creditors with claims against a debtor have three opportunities to file proofs of claim: (i)
within 20 days following the date of the publication of the Order for Relief; (ii) within five days of
the filing of a provisional list of creditors by the Conciliator; or (iii) within nine days of issuance of
the Order of Recognition, Ranking and Preference of Claims. Failure to file a proof of claim prior to
one of these deadlines, or to otherwise ensure that a claim is identified on the Order of Recognition,
Ranking and Preference of Claims, results in the permanent loss of the claim. Foreign creditors have
45 calendar days to file their proof of claim after process is served. Process can be served by courier
and does not require Letters Rogatory or other formalities.
Proofs of claim must contain the same basic information required in a United States
proceeding, including the name and address of the creditor, the amount of the claim, a description
of any collateral, as well as a description of the claim generally (e.g., the types of documents and the
relationship that gives rise to the claim). The proof of claim must also state whether the claim is
entitled to preferential or priority status. It must be filed using the form approved by IFECOM and
4
must be accompanied by any original documents (or copies certified by a notary public).
C.
Provisional List
After the first deadline to file proofs of claim, the Conciliator is required to submit to the
court a provisional list of claims against the debtor using the information gathered from the
debtor, the data included in the Auditor’s report, and filed proofs of claims. The filing of the
provisional list commences a five-day period for creditors and other interested parties in interest
to file objections to the claims on the provisional list, including the validity of, or the proposed
amount or priority assigned to, the claims.
4
All forms created by IFECOM can be found at www.ifecom.cjf.gob.mx
15
D.
Final List and Order of Recognition, Ranking and Preference of Claims
Once the five-day period to object to the provisional list has elapsed, the court sends copies
of all objections received to the Conciliator, who then has up to ten business days in which to revise
the provisional list of claims based upon the objections and to prepare the proposed final list of
claims for submission to the court. Once the proposed final list is submitted, the district judge
decides whether to accept the list and, if so, enters an order declaring the final list received from
the Conciliator as the list of “recognized claims” against the debtor. That order is called the Order of
Recognition, Ranking and Preference of Claims. The final list will rank the claims in priority set forth
in section IV.D.
The debtor, any creditor (regardless of whether it has participated in the proceedings), the
Controller, the Conciliator, the Trustee or the Attorney General may appeal the Order of
Recognition, Ranking, and Preference of Claims within nine days of its entry. If a creditor did not file
a claim, it has an opportunity to do so no later than nine days after the final list of creditors is
published.
Tax liabilities can be determined at any time. The Conciliator, when drafting the
provisional list of creditors, must include all tax liabilities. Tax claims continue to accrue fines and
related charges. If a reorganization plan is reached in the conciliation phase, the fines accrued
during the conciliation proceeding will be disallowed.
E.
Setoff
After the date on which the Order for Relief is entered, only the following claims may be set
off:
•
any rights in favor of and obligations owed by the debtor arising out of the same
transaction, unless the transaction is terminated by operation of law as a result of the
Order for Relief;
•
any rights in favor of and obligations owed by the debtor that became due before the
Order for Relief, where the setoff is authorized under applicable law; and
•
any tax refunds to and tax claims payable by the debtor.
VIII.
SELECTED PRACTICE ISSUES
A.
Use, Sale or Lease of Property of the Estate in the Ordinary Course of Business. While the
debtor generally remains in control of the company, the Conciliator supervises the accounting and
operations of the debtor. The Conciliator, in consultation with any Controllers, as discussed above
in Section IV.C., must consent to the execution of any loan agreement or the sale of assets outside of
the ordinary course of business. The Conciliator may not sell assets outside the ordinary course of
business. The Conciliator must inform the district judge of any new loans or the sale of property.
Creditors and the Attorney General may object.
B.
Use of Cash Collateral. Under the LCM, after an Order for Liquidation has been entered, the
Trustee must file a report every two months identifying the assets that were sold and a list of the
claim holders that will be paid. No express reference is made to cash collateral, but it is understood
that the Trustee may use cash collateral to maintain the company while deciding whether to sell it
as a whole or to liquidate it piecemeal.
16
During a reorganization, cash may be used to pay administrative expenses incurred in the
ordinary course of business. During liquidation, however, administrative expenses will only be
paid if the Trustee is considering selling the corporation as a whole instead of selling the assets
separately. If the latter, no administrative expenses may be paid.
C.
Equitable Subordination. Generally, Mexican corporate law provides that shareholders
may only receive a distribution if there are sufficient assets to satisfy all senior claims. The General
Law of Mercantile Companies (Ley General de Sociedades Mercantiles) provides that in liquidation,
the Trustees shall pay all debts of the company before distributing the remainder to the
shareholders. The LCM does not expressly address equitable subordination.
D.
Fraudulent Conveyances. A fraudulent conveyance under the LCM is any transfer by the
debtor designed to defraud its creditors if the transferee had knowledge of the fraudulent purpose,
or if the transfer was made at no cost to the transferee much like the absence of “reasonably
equivalent value” rule under United States law. The LCM lists transactions that are presumed to be
fraudulent conveyances, including insider transactions with board members, family members,
shareholders or affiliates and subsidiaries. Moreover, a fraudulent conveyance is presumed to take
place when the debtor pays off a loan that was not yet due, the debtor increases the collateral for a
loan or when a loan is repaid in kind, when it was originally payable in cash. Although fraudulent
transfers are characterized as criminal, an action to avoid a fraudulent conveyance may be brought
by the Conciliator or a creditor. Given that fraud is difficult to prove, fraudulent conveyance actions
are rarely successful in Mexico. Indeed, it is not uncommon for shareholders of companies to
transfer company assets to themselves or third parties without much risk of liability. This is a
reoccurring cause of concern for foreign creditors in Mexican proceedings.
E.
Preferences.. Under the LCM, certain transfers may be avoided as preferential. In general,
avoidance as a preference under Mexican law requires a finding of fraudulent intent. The issuance
of the Order for Relief effectively sets a “look-back” period during which suspect transfers may have
occurred, which under the LCM is 270 calendar days before the entry of the Order for Relief.
However, the Conciliator, the Controller, or any creditor can request the court to fix a longer lookback period in appropriate circumstances. The LCM is not clear, however, about who has standing
to request the avoidance of a preferential transfer.
F.
Substantive Consolidation.. The LCM provides that the bankruptcy proceedings of two or
more debtors shall not be consolidated, except as specifically provided therein. While the LCM
permits proceedings of affiliated companies to be consolidated, the “consolidated” proceedings
must be conducted separately. Mexican courts have generally interpreted this to mean that the
assets and liabilities of affiliated companies cannot be combined. Accordingly, substantive
consolidation is generally not available in Mexico.
G.
Director and Officer Liability. The officers and directors of an insolvent debtor may be
subject to certain liabilities after the Order for Relief has been entered. Before a Conciliator has
been appointed by IFECOM, the debtor, its directors and managers are considered custodians of
the debtor’s assets. Directors can be held criminally liable if they do not comply with the judge’s
order to turn over the books to the person appointed by the judge, or if they enter into any
transactions that increase the liabilities of the debtor.
17
App en dix
SPANISH – ENGLI SH TERMS
Acreedor
Acreedores Comunes
Acreedores con Garantía Real
Comerciante
Compensación
Conciliador
Contratos Pendientes
Convenio
Convenio Aprobado por el Juez
Crédito
Diario Oficial de la Federación
Espera
Fideicomiso
Interventor
Juez de Distrito
Ley de Concursos Mercantiles
Ley de Quiebras y Suspensión de Pagos
Lista Definitiva
Lista Provisional
Masa
Ministerio Público
Sentencia de Concurso
Sentencia de Quiebra
Sentencia de Reconocimiento, Graduación y
Prelación de Créditos
Síndico
Unidades de Inversion
Visita
Visitador
Creditor
Unsecured Creditors
Secured Creditors
Debtor
Setoff/Recoupment
Conciliator
Executory Contracts
Reorganization Plan
Plan Confirmed by the judge
Claim
Federal Official Gazette
Grace period
Trust
Controller
District judge
Mexican Bankruptcy Law
Law of Bankruptcy and Suspension of Payments
Final List
Provisional List
Estate
Attorney General
Order for Relief
Order for Liquidation
Order of Recognition, Ranking and Preference of
Claims
Trustee
UDI
Eligibility Review
Auditor
February 2009
E FFECTS OF G LOBAL C RISIS IN THE
M EXICAN C APITAL M ARKETS : H OW THE
M EXICAN F INANCIAL B AILOUT TO
S UPPORT THE R EFINANCING OF M EXICAN
C OMMERCIAL P APER P ROGRAMS W ORKS
By Boris Otto and Luis Castro
Introduction
As a result of the global financial crisis and the contraction of available credit,
Mexican companies have encountered serious difficulties rolling over commercial
paper programs thereby accelerating investors desertion rate of commercial
paper programs at an alarming rate. The main reasons for the flight away from
commercial paper are the loss of investor appetite and the aversion to risk
stemming from the strong uncertainty related to the Mexican and global financial
markets.
In October 2008, many of Mexico’s blue chip companies have been unable to
refinance their commercial paper programs. These companies include: Ford Credit
de México which seeks to issue MXP $100 million; Cemex which seeks to issue MXP
$500 million; GMAC Mexicana proposes to issue MXP $200 million; ING
Hipotecaria seeks to issue MXP $50 million; and Consupago which seeks to issue
MXP $380 million.
The findings of Mexican debt sector analysts show that as recently as September
2008, Mexican “AAA”-rated issuers were placing debt in the market at a rate equal
1
to TIIE (approximately 8.8%) plus 80 basis points while in October 2008, the
spread over the TIIE rate increased to a staggering 400 basis points.
In view of the serious nature of the problem and the potential damages that
many Mexican companies may suffer from their inability to refinance their
respective commercial paper programs, the Mexican federal government
launched an emergency bailout program on October 21, 2008 through two
federally controlled banks, Nacional Financiera S.N.C. (“NAFIN”) and Banco
Nacional de Comercio Exterior, S.N.C. (“BANCOMEXT”).
The Program
The main purpose of the bailout program (the “Program”) is to assist Mexican
investment grade companies to renew short term commercial paper issuances, as
well as long term debt with bullet payments in the Mexican market by providing
guaranties up to MXP $50 billion.
Under the Program, NAFIN will guarantee on a first loss basis up to 50% of the
principal amount issued, excluding interest. The guarantee will cover up to MXP
$500 million per issuance for a term of 180 days with one additional renewal
period not to exceed 360 days from the date of first issuance. This guarantee will
1
Tasa de Interes Interbancaria de Equilibrio
EFFECTS OF GLOBAL CRISIS IN THE MEXICAN CAPITAL MARKETS
be available for the renovation of commercial paper programs with maturity dates occurring up to and
including December 31, 2008.
Companies that wish to take advantage of the Program are required to provide credit support to NAFIN and
may be in the form of a mortgage on real property assets, commercial assets, ships as well as airplanes, a
pledge of shares, cash, security interests, and goods or by naming NAFIN as the beneficiary of a guaranty
trust of real estate assets, security interests and goods. All guarantees provided under the Program will also
carry a cost to the issuer in form of a commission to be paid to the financial institution issuing the
guarantee. The commission will be calculated based on the rating granted to the issuer by the rating
agencies. In the event that multiple ratings are obtained, the lower rating will be used for purposes of
calculating the commission.
The Program is aimed at assisting non-banking corporations and financial intermediaries known as
2
3
SOFOMES and non-bank lenders known as SOFOLES , but excluding real estate mortgage lenders.
Since the implementation of the Program, eight issuers totaling an amount of MXP $4.7 billon of the MXP
$50 billion earmarked for the Program, have participated in the Program and are enjoying the benefits of
their participation. As an example, during the week of October 16, 2008, and before the implementation of
the Program twenty percent (20%) of all outstanding commercial paper programs were renewed. That same
week, twenty-four (24) issuances became due totaling MXP 6.5 billion of which only 9 were renewed in an
amount equal to MXP 1.3 billion.
Over the course of the following three week period, and thanks to the implementation of the Program, the
renewal rate of commercial paper programs with and without the use of the guaranty has increased
dramatically. During the week of October 23, 2008, the renovation rate was 56% while the renovation rate
increased to 89% during the week of October 30, 2008. The month of November has witnessed a renovation
rate of 100%. In this period of time from October 23, 2008 to date, we can appreciate the increase in the
percentage of renewal since it is precisely in this period when Cemex, Credito Real, Unifin, El Universal,
Soriana, Coppel and Banregio, made use of the Program. To highlight the successful implementation of the
Program one can look to the recent experience of Soriana which obtained a guaranty under the Program
from NAFIN for one week. In that one week period, demand for the issuance was more than 2 to 1. The
following week, Soriana was able to fully renew its commercial paper program without the use of a NAFIN
guaranty.
Conclusions
It is a fact that given the current global economic situation issuers find themselves in uncharted waters
where not even the most talented and informed market watchers can predict where the markets are
headed and what is going to happen next. Given this uncertainty, governments are undertaking
unprecedented measures in order to mitigate to the greatest extent possible the adverse effects of the
financial crisis and to restore investor confidence. At present, we can only speculate as to whether such
measures, such as the one the Mexican government has launched, will be successful in the long term in
mitigating the negative effects of the financial crisis. The early indications from Mexico demonstrate that
the Program has had a positive effect and has allowed investment grade issuers that adhere to the Program
to renew their commercial paper programs. However, the Program is limited to the renovation of
commercial paper programs with maturity dates occurring up to December 31, 2008. Additionally this
Program may prove very costly to the issuers, since it requires important collateral levels and payment of a
commission that varies depending on the credit rating of the issuer.
2
Sociedad Financiera de Objeto Múltiple
3
Sociedad Financiera de Objeto Limitado
2
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REPRINTED FROM
P R OJ E C T F I N A N C E
NewsWire
January 2009
Options for Restructuring
Publicly-Traded Debt
by Marc M. Rossell, in New York
We live in turbulent financial times. Even companies with relatively stable financial
positions face the prospect of restructuring their liabilities.
The absence of a meaningful credit market to refinance maturing indebtedness,
the lack of short-term liquidity, or simply the inability to maintain required financial
ratios in loan agreements may generate a need to consider a liability management
transaction of some kind.
Companies whose debt securities trade publicly at a discount to par or face value
may also want to capture some of the discount by purchasing their own securities
with available cash.
Companies with bank debt or debt held privately by a few institutions can often
deal with their creditors on a consensual basis without worrying about US securities
laws. However, companies with outstanding indebtedness or that wish to issue new
indebtedness in the form of bonds or other similar debt constituting “securities”
must face a series of other issues arising under the securities laws.
This article outlines some of the securities law considerations companies have to
take into account when contemplating an out-of-court restructuring of their publiclyissued debt securities. For this purpose, “publicly-issued” means issued in a public
offering or otherwise traded in the institutional capital markets as restricted securities. This article does not include any discussion of equity securities, including
convertible debt that is considered equity under the securities laws, nor does it
consider issues related to securities issued by a company in a bankruptcy proceeding.
Six Options
Companies with outstanding debt securities can engage in a variety of transactions
with holders. The choices depend to some extent on whether or not the company has
access to cash.
Where cash is available, either from internal funds, new financing or both, a
company can consider an optional redemption, open market purchases or a cash
tender offer.
Without cash, the most likely alternative is an exchange offer of / continued page 2
Restructuring Debt
continued from page 1
new securities for the existing securities.
In the case of either a cash tender offer or an exchange
offer, there is often a consent solicitation as well to modify
the terms of the existing securities. If only a waiver or
amendment of existing terms is required, a stand-alone
consent solicitation may be the answer.
Options for Company with Cash
If the agreement governing the indebtedness, typically an
indenture, permits the company to redeem the bonds prior
to maturity, then an optional redemption of the debt securities can be made. However, many indentures restrict such
redemptions in the early years of the bond — the so-called
“non-call period” — and in later years the exercise of the
redemption feature may be subject to payment of an
additional premium which may be unattractive. Some
indentures allow redemptions at any time subject to
payment of a “make-whole” premium based on the recuperation of the yield through maturity, a price that is usually
quite high. Where the bonds are trading at a discount to par
value, these options will be particularly unappealing.
Most indentures do not restrict the company from
repurchasing its own bonds in the open market. If no such
restrictions exist, and assuming there are no other applicable contractual or regulatory prohibitions binding on the
company, then cash repurchases in the open market can be
made through privately negotiated transactions with
individual holders, either directly or through the intermediation of a broker.
Most open market debt repurchases can be structured in
a manner to avoid the application of the “tender offer” rules
under a US securities law called the Exchange Act, but
counsel should be consulted prior to undertaking any such
program to ensure that such purchases do not amount to a
tender offer. Repurchases that might be recharacterized as a
non-compliant tender offer could expose the company to
liability and sanctions.
What constitutes a “tender offer”? Neither the US securities laws nor the US Securities and Exchange Commission
has defined the term “tender offer,” and there is not much
case law or SEC commentary on the topic. Eight factors have
generally been cited as evidence of a tender offer. Not all of
2
PROJECT FINANCE NEWSWIRE
JANUARY 2009
them have to be present. The eight are 1) active and
widespread solicitation of holders, 2) solicitation for a
substantial percentage of the outstanding debt, 3) the offer
is made at a premium over the prevailing market price, 4) the
terms of the offer are firm and not negotiable, 5) the offer is
contingent on a minimum number of tendered securities, 6)
the offer is open only for a limited period, 7) the offeree is
subject to pressure to sell the securities, and 8) the public
announcement of a purchasing program precedes or accompanies rapid accumulation of the securities.
The best way to avoid inadvertently making a tender
offer is to solicit only a limited number of holders, preferably
sophisticated investors, stretch the repurchases over a long
period of time, without deadlines or other pressures,
purchase on separately-negotiated terms and prices from
different holders, and consider limiting the total amount of
securities purchased in the open market. If both a repurchase program and an overt tender offer are contemplated,
the company should consider undertaking them separately
and having some period of time elapse between the two
events to avoid the repurchases being considered part of
the tender offer.
Indentures typically provide that bonds purchased or
otherwise held by the company or an affiliate will not be
considered to be “outstanding” for purposes of tabulating
votes required for taking action under the indenture such as
waivers, consents and amendments. Companies and their
affiliates (often controlling shareholders) should be
conscious of this limitation if there is any intent to influence the outcome of a vote by acquiring outstanding bonds
in the open market or otherwise.
Finally, a company with cash may wish to offer all
holders the opportunity to tender their bonds for a cash
payment. Cash tender offers for debt securities are
regulated by section 14(e) of the Exchange Act. These rules
generally prohibit fraudulent and manipulative activity and
require that the tender offer be kept open for a minimum of
20 business days from commencement and 10 business
days from notice of a change in either the percentage of
securities sought, the consideration offered or the dealer’s
soliciting fee.
Since it is often impractical to leave a debt tender offer
Cv
bnm
open for such a long period, the SEC has issued a series of
“no-action” letters exempting certain tender offers for
investment-grade securities from the 20-business-day rule,
subject to certain conditions. Pricing formulations vary, but
since the “equal treatment” rules for tender offers of equity
securities do not apply to non-convertible debt securities,
alternative pricing mechanisms such as Dutch auctions and
fixed-spread pricing are available. There are also certain
structural features to the offer that can be implemented to
incentivize holders to tender early, such as “early bird”
premiums to holders who tender before a certain date, thus
providing greater certainty to the company as to results
prior to the expiration of the offer.
The Exchange Act rules do not require the filing of any
offering document with the SEC, and there are no specific
disclosure requirements that apply. However, an offer-topurchase document is customarily prepared, and it should
be materially accurate and not misleading to avoid liability.
If the targeted debt securities are listed or quoted on a
securities exchange, then the rules for such exchange must
also be reviewed to determine whether any specific disclosure or procedural requirements apply.
Anti-Fraud Liability
Whether the company engages in open market purchases
or conducts a cash tender offer, often the most significant
legal issue is avoiding liability under the anti-fraud provisions of the securities laws, including Rule 10b-5 under the
Exchange Act.
This rule generally prohibits the use of materially
misleading statements or omissions in connection with the
purchase or sale of a security and otherwise prohibits the
use of manipulation or deceptive devices to purchase or sell
a security.
The application of Rule 10b-5 in the context of open
market debt purchases is not entirely clear. If the company
makes statements in the context of a purchase that are
materially misleading or inaccurate, then the seller may
have a Rule 10b-5 claim.
Where no statements are made but the company has
inside information and the purchases are made through a
broker, the result is less clear because Rule 10b-5 only
imposes liability for omissions where the buyer has a duty
to disclose and has failed to do so. Recent decisions have
held that companies that are solvent have no fiduciary
duties to holders of their debt securities and, thus, assuming current public disclosures by the company are correct,
there would be no duty to disclose material non-public
information in the context of a debt repurchase. However,
not all courts might agree with this position and there are
other theories, such as common law fraud, that might be
used to infer a duty to disclose even in the absence of a
fiduciary duty.
Options for Companies Without Cash
A company may not want to use cash or may otherwise
need to make an offering of new securities with different
terms to its existing holders.
Most indentures provide that a unanimous consent is
required to change fundamental economic terms of the
securities (such as maturity, interest rates or mandatory
redemption events). Obtaining such consents is often quite
difficult. Any exchange of newly-issued debt or equity
securities for outstanding debt securities is considered an
offer of securities under the Securities Act of 1933 and, thus,
it must be registered with the SEC unless an exemption
from registration is available. The most common exemptions are the section 3(a)(9) exemption and the so-called
“private placement” or section 4(2) exemption. Exchange
offers are also considered tender offers and, thus, the
Exchange Act rules for tender offers discussed earlier also
apply.
Although there is no legal requirement for the company
to use the services of an intermediary to solicit exchanges, it
is customary in most situations to appoint a dealermanager of an exchange offer. In that event, due to similar
liability concerns that arise in any new offering of securities,
dealer-managers customarily perform due diligence on the
company and request third-party assurances on whatever
offering document is prepared, including auditors’ comfort
letters and lawyers’ negative assurances or “10b-5 letters.”
Section 3(a)(9) of the Securities Act allows a company to
offer and sell new securities to existing holders of its own
securities without registration, subject to certain conditions.
The offering must be made exclusively by exchange with
its existing holders. The issuer of the new securities must
also be the same issuer as the issuer of the old securities, a
requirement that can present structural challenges if there
/ continued page 4
are parent or subsidiary guaranties
JANUARY 2009
3
Restructuring Debt
involved. One of the most problematic requirements of
section 3(a)(9) is that the company cannot pay a fee to the
dealer-managers to solicit tenders. The SEC has issued a
series of no-action letters that permit a financial adviser to
undertake certain administrative activities in connection
with the exchange, including pre-launch discussions with
sophisticated holders of bonds, so long as there is no
success fee involved. The restriction on these fee arrangements where active solicitation may be required in an
exchange often leads companies to select another form of
exchange offer. In a section 3(a)(9) exchange offer, similar to
registered exchanges, there is no restriction on general
solicitation or advertising, thus allowing unrestricted
publicity, and there are no restrictions on the nature of the
offerees.
Another exemption available for an exchange offer is the
so-called “private placement” exemption under section 4(2)
of the Securities Act. With this structure, the offer and sale
are made only to accredited investors such as large institutional holders; non-US persons are also often solicited in
reliance on Regulation S of the Securities Act under this
concurrent exemption. Another important limitation of this
exemption is that there can be no general solicitation or
advertising, a restriction on publicity that should be taken
into account when considering this alternative. However,
this exemption does not impose any restrictions on fees for
the dealer-manager, so there is more flexibility on that
issue.
Because of the limitation on the nature of the offerees,
the offering document cannot simply be distributed to all
existing holders. Holders must pre-qualify through an eligibility questionnaire before receiving an offering document.
In most exchange offers for outstanding debt, there is little
if any non-accredited investor participation and, thus, this
pre-qualification process mostly affects timing since the
offer takes more time to implement.
Another option is a registered exchange offer. A company
can file a registration statement on Form S-4 with the SEC
to register the offer and sale of the new debt or equity
securities to the holders of its existing bonds. Form F-4 must
be used if the company is a foreign private issuer.
In a registered exchange offer, there are no structural
4
JANUARY 2009
restrictions or fee limitations as there may be in a section
3(a)(9) exchange and dealer-managers can freely solicit
tenders and all holders can participate, including retail
investors. However, companies cannot generally use existing “shelf” registration statements to conduct an exchange
offer, and the SEC may elect to review the new registration
statement, a process that can be lengthy and unpredictable.
Companies are also subject to heightened liabilities under
the Securities Act for disclosures and omissions in the registration statement and prospectus.
Exit Consents
In order to encourage holders to tender their bonds in an
exchange offer or cash tender, and to allow the company to
avoid the application of restrictive covenants in the indenture for the bonds that the company is attempting to retire
or repurchase, companies often seek “exit consents.” This
refers to the practice of having tendering holders consent to
amendments or waivers of covenants or other terms in the
existing indenture as a condition to acceptance of the
tender or exchange.
The amendments or waivers that are sought are
typically those that can be adopted or granted with a simple
majority vote of bondholders. Holders tendering their bonds
for cash or new securities will generally not be concerned
about the protections in the existing indenture and those
refusing to tender or exchange their bonds will be left with
an indenture without the same protections. In addition, if
the tender or exchange is successful, non-tendering holders
will be left holding bonds with a more limited trading
market which is likely to affect trading prices for the old
securities adversely; this also acts as an additional incentive
to participate in the tender or exchange.
Companies should consider the application of the “new
security” doctrine if a consent to an amendment or waiver
relates to fundamental terms of the securities.
The SEC has taken the position that consents to amendments to existing debt securities that fundamentally alter
the terms of debt securities have the effect of creating a
new security, thus requiring analysis of the consent under
the Securities Act similar to what occurs in an exchange
offer. In addition, in the context of exit consents included as
Project Finance NewsWire
Restructuring Debt
part of an exchange offer relying on
the private placement exemption of
section 4(2) of the Securities Act, one
issue to be addressed is whether or
not a consent is valid if not all holders
are given an opportunity to consent.
Certain New York case law has cast
some doubt on this point. Because
private placements exclude nonaccredited investors, to the extent
there are any such holders excluded,
consideration needs to be given to
restructuring the transaction to
accommodate this concern: for
example, by undertaking a separate
consent solicitation outside of the
exchange offer to afford all holders
the opportunity to participate.
Tax Implications
The tax implications of debt repurchases and exchange offers should be
considered; they are usually disclosed
to existing holders in any offering
document. Although the application
of the tax rules to a particular transaction is often fact specific, certain
principles generally apply.
A company repurchasing debt at a
discount will generally recognize
“cancellation of indebtedness” income
in an amount equal to the discount.
In an exchange offer for new
securities, the company will generally
recognize this income to the extent
that the amount owed on the existing
debt exceeds the fair market value of
the new securities. In the case of new
debt securities, if the fair market value
of the new securities is less than the
outstanding principal amount of the
debt, there will likely be original issue
discount that the holders of the new
debt will be required to treat as
income (with a corresponding interest
deduction for the company over the
life of the new debt).
is an information source only. Readers
should not act upon information in this
publication without consulting counsel.
The material in this publication may be
reproduced, in whole or in part, with
acknowledgment of its source and
copyright. For further information,
complimentary copies or changes of
address, please contact our editor,
Keith Martin, in Washington
([email protected]).
Chadbourne & Parke LLP
New York, NY 10112
+1 (212) 408-5100
1200 New Hampshire Ave., NW
Washington, DC 20036
+1 (202) 974-5600
1100 Louisiana, Suite 3500
Houston, TX 77002
+1 (713) 571-5900
350 South Grand Ave.
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Los Angeles, CA 90071
+1 (213) 892-1000
Paseo de Tamarindos, No. 400-B Piso 22
05120 México, D.F., México
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Room 902,Tower A, Beijing Fortune Centre
7 Dongsanhuan Zhonglu, Chaoyang District
Beijing 100020, China
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+44 (0)20 7337-8000
© 2009 Chadbourne & Parke LLP
5
JANUARY 2009
B ANKRUPTCY G ROUP C ONTACT L IST
New York
Mexico City
Bankruptcy and Restructruing Group
Boris Otto
+52 (55) 3000-0601
[email protected]
Howard Seife
+1 (212) 408-5361
[email protected]
David M. LeMay
+1 (212) 408-5112
[email protected]
Joseph H. Smolinsky
+1 (212) 408-5489
[email protected]
N. Theodore Zink
+1 (212) 408-5356
[email protected]
Douglas E. Deutsch
+1 (212) 408-5169
[email protected]
Andrew Rosenblatt
+1 (212) 408-5559
[email protected]
Francisco Vazquez
+1 (212) 408-5111
[email protected]
Capital Markets Group
Allen Miller – Co-Head, Latin America Practice Group
+1 (212) 408-5454
[email protected]
Marc Rossell
+1 (212) 408-1057
[email protected]
Carlos Albarracin
+1 (212) 408-1081
[email protected]
Luis Enrique Graham
+52 (55) 3000-0604
[email protected]
José Antonio Chávez
+52 (55) 3000-0621
[email protected]
Salvador Fonseca
+52 (55) 3000-0635
[email protected]
Segio Rodriguez
+52 (55) 3000-0648
[email protected]

Bankruptcy and Corporate Restructurings in Mexico: Recent

Transcription

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