New York Judge Rules on Case Filed by Vitro
December 9, 2011
The New York Supreme Court for the state of New York has issued
a decision on a request for declaratory judgment brought by Wilmington
Trust Co., which serves as indenture trustee for two of the issues
of Mexico-based Vitro S.A.B. de C.V.'s existing notes. In an ongoing
case related Vitro S.A.B.'s bankruptcy proceedings in Mexico, the
New York State Supreme Court ruled that "whether such rights
and obligations can or cannot be novated, substituted, released
or modified under the Mexican bankruptcy law is an issue for the
Further, the judge ruled that "whether any Concurso Plan that
is ultimately approved by the Mexican Court may be enforced in the
United States is an issue for the federal courts, including the
Vitro had argued that "a declaratory judgment cannot be issued
because of a purported lack of a 'justiciable controversy,"
according to court documents.
Vitro further claimed, "
At the present stage, the
Concurso Plan proposed by Vitro SAB, which contains provisions that
extinguish the obligations of the Guarantors under the Indentures
and the Guranties, 'has not yet been finalized by the Conciliador,
much less has such plan been approved by Vitro SAB's creditors of
the Mexican District Court,' and the controversy identified by Wilmington
is 'not yet ripe for determination,'" according to court documents.
Wilmington had proposed that the court issue a declaratory judgment,
providing for, inter alia, that "the guarantees cannot be novated,
substituted, released, waived, discharged, modified, extinguished
or otherwise affected by any reorganization plan resulting from
any insolvency proceeding of Vitro SAB."
Vitro has issued a press release in response to the decision.
“We are pleased that the New York Court recognized the importance of the concurso mercantil proceeding and the right of the Mexican court to make its own determination of the application of Mexican law,” says Claudio Del Valle, Vitro’s chief restructuring officer, in the release. “We are considering all of our options with regard to this decision. This decision is on a purely legal issue and does not impact Vitro’s business or operations.”
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