Vitro and Creditors Disagree Over Enforcement of Mexican Ruling in Texas Hearing
June 5, 2012
by Katie O'Mara, firstname.lastname@example.org
In a hearing yesterday in Texas, Vitro and the noteholders in the company’s ongoing involuntary bankruptcy case debated whether a recent Mexican bankruptcy court ruling in Vitro’s favor should be enforced in the U.S. A judge for the Fourth District Civil and Labor Matters in Monterrey, Mexico, approved Vitro S.A.B.’s Mexican restructuring plan earlier this year, while the U.S. bankruptcy case continues.
Counsel Andrew Leblanc of Milbank, Tweed, Hadley and McCloy LLP, told the judge that the court should respect the Mexican ruling and therefore enforce the decision accordingly. He also referred to the creditors as being “disgruntled” with the decision, which has led them to the current disagreement over enforcement.
“So they cannot contend, because their own witnesses cannot say, that the Mexican bankruptcy law isn’t a fair bankruptcy law worthy of respect in this court. It provides creditors with due process. It provides creditors with opportunities to challenge fraudulent transfer,” said Leblanc. “… is enforcing this plan, enforcing the decision of the Mexican court … contrary to U.S. public policy? And the answer to that question is no.”
Speaking for the creditors, Jay Westbrook of the University of Texas at Austin School of Law, argued that the court should be weary of “assuming” that the decision and enforcement decided upon in Mexico is fair.
“We have to avoid just assuming that any action by a foreign bankruptcy court should be enforced in our country without some review for fundamental fairness,” said Westbrook.
“As the court knows, we think the Mexican court got it wrong. We’ve appealed those issues in Mexico, and those will be decided in Mexico,” said Allan Brilliant of Dechert LLP, also representing the creditors. “This hearing is about whether the judgment of the Mexican court, which is still on appeal in Mexico, should be enforced in the United States under the standards required under Chapter 15.”
In November 2010 four Vitro S.A.B. creditors filed a petition for involuntary bankruptcy against 15 of the company’s U.S. subsidiaries. The creditors that brought the action forth included Knighthead Master Fund LP in New York, with a claim of approximately $42 million in senior notes; Brookville Horizons Fund L.P. in Greenwich, Conn., with a claim of $2 million in senior notes; Davidson Kempner Distressed Opportunities Fund LP in New York, with a claim of approximately $11 million in senior notes; and Lord Abbett Bond-Debenture Fund Inc. in Jersey City, N.J., with a claim of $20 million in senior notes.
The hearing will continue this week as the judge hears arguments from both Vitro and the creditors. At press time, the judge had not yet made a ruling on the U.S. case.
“We are pleased to have this opportunity to demonstrate our case for Chapter 15 enforcement and look forward to serving our U.S. customers without interruption,” says Vitro spokesman Roberto Riva Palacio in a statement about the Texas hearing.
This story is an original story by AGRR™ magazine/glassBYTEs.com™. Subscribe to AGRR™ Magazine.
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