Texas Court Rules to Not Enforce Portions of Mexican Vitro Plan of Reorganization
June 14, 2012
by Katie O'Mara, email@example.com
A Texas bankruptcy court ruled Wednesday that it will not enforce Vitro’s Mexican Plan of Reorganization in the United States. The ruling comes days after the counsels for Vitro and the noteholders presented their cases in front of the court.
“Having reviewed the evidence and considered the testimony of witnesses over four days, this court believes that a portion of the Concurso plan should not be enforced as presented,” wrote the judge in his ruling. “Accordingly, this court concludes that the Concurso plan approved in this instance, which extinguishes the guarantee claims of the objecting creditors that were given under an indenture issued in the United States against non-debtor entities that are subsidiaries of Vitro, should not be accorded comity to the extent it provides for the extinguishment of the non-debtor guarantees of the indentures. Such order manifestly contravenes the public policy of the United States and is also precluded from enforcement under 1507, 1521 and 1522 of the Bankruptcy Code.”
Vitro has expressed its intent to immediately file an appeal on this matter.
“We will defend the enforcement of Vitro’s restructuring at the subsidiary level in the U.S.,” says Claudio Del Valle, chief restructuring office for Vitro.
The court did affirm Vitro's claims that there had been no corruption in the Mexican proceedings and that the judge was unable to confirm that if the Concurso plan was enforced in the U.S. it would have adverse effects on credit markets. In addition, the court also agreed with Vitro's contention that there was no evidence that the Concurso proceeding was unfair to the noteholders.
“We are pleased to have won on all of the factual issues in this ruling, and we are confident in the legal bases for our arguments on appeal,” says Andrew LeBlanc, counsel for Vitro.
The court stated that if the Concurso ruling was enforced it could create a precedent for further cases.
“However, if approved for enforcement, the present order would create precedent without any seeming bounds. The Concurso plan presently before the court discharges the unsecured debt of non-debtor subsidiaries. What is to prevent this type of plan from eventually giving non-consensual releases to discharge the liabilities of officers, directors and any other person?” reads the ruling.
The order says the court intends to stay the decision until June 29 and will allow Vitro time to appeal and to seek a stay on appeal.
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