By Ivan Castano
CORPORATE BANKRUPTCY: Down by law
A tough ruling on Mexican glassmaker Vitro’s bankruptcy appeal has triggered heated debate in financial markets – not least for its far reaching implications
Mexico's bankruptcy law must be overhauled and more
specialized judges hired to prevent insolvent corporations from
flouting their creditor obligations.
This was the resounding message from corporate turnaround
experts, during a LatinFinance panel event held in Mexico City
on June 21. The event - The Rules of the Game in Mexico: The
Corporate Workout Law in Practice - brought heavy condemnation
on bankrupt Mexican glass-maker Vitro for pursuing a
'fraudulent' turnaround that has raised a slew of controversial
The case, which has also spawned big cross-border lawsuits,
could change the way future Latin American corporate
bankruptcies are decided in the US, Mexico and Latin
At stake are $1.6 billion of bond debt (plus $600 million of
unpaid interest) held by a clutch of US hedge funds, which
Mexico's bankruptcy court has failed to recognize, 'twisting
the law' and enabling Vitro to avoid payment, according to
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