Vitro to Appeal Recent Bankruptcy Court Ruling; Court Orders Stay of Temporary Restraining Order Expiration
June 29, 2012
by Penny Stacey, email@example.com
The U.S. Court of Appeals for the Fifth Circuit has granted Vitro
S.A.B. permission to appeal a recent
decision by the U.S. Bankruptcy Court for the District of
Northern Texas not to enforce the company’s Mexican reorganization
plan in the United States. In addition, the court has issued an
order granting a stay for the expiration of a temporary restraining
order (TRO) previously instated in the case, at Vitro’s request.
The TRO, which had been set to expire today at 5 p.m., prohibits
Vitro’s creditors “from taking actions to enforce judgments
against Vitro SAB and its non-debtor affiliates.”
“It also protects the appellees by enjoining Vitro SAB and
its non-debtor affiliates from transferring any assets other than
in the ordinary course of business,” writes the company in
its June 28 motion. “ ... Absent the TRO, Vitro will be expected
to somehow comply with fundamentally conflicting orders issued by
a court in the United States and a court in Mexico and, moreover,
Vitro and its subsidiaries, and their customers, will be exposed
to relentless attacks by the apellees across several courts in the
United States—which attacks are expressly forbidden by order
of the Mexican court.”
Without the TRO, Vitro officials allege that the company’s
creditors would begin “turnover proceedings against Vitro
customers,” as they did before the TRO was entered in March.
Vitro's request for preliminary injunction (which resulted in the
stay of the TRO expiration) also includes some insight toward its
view of the bankruptcy court’s recent decision—and its
optimism for the appeal.
The company alleges that the bankruptcy court’s decision not
to enforce the Mexican reorganization plan in the U.S. “was
based solely on the fact that the Concurso plan included
what the bankruptcy court termed a ‘release’ of the
obligations of non-debtor guarantors of certain of Vitro SAB’s
“Indeed, the Bankruptcy Court reached this conclusion despite
expressly rejecting arguments made by the objecting noteholders
that the Mexican process that resulted in the Concurso plan
was either procedurally unfair for creditors or the product of corruption,
or that such plan would have an adverse impact on the credit markets
in the United States,” writes Vitro. “In not enforcing
the Concurso plan, the bankruptcy court completely ignored
binding Fifth Circuit law and issued an unprecedented, erroneous
decision that will have far-reaching negative effects on the future
of Chapter 15 and cross-border judicial relations between the United
States and Mexico.”
Company officials predict they will “succeed on the merits
of this appeal in light of binding Fifth Circuit precedent ....
that compels reversal of the legal conclusions reached by the Bankruptcy
“Second, there is no question that Vitro will suffer irreparable
harm due to both the legal and financial uncertainty resulting from
Vitro entities having to comply with competing court orders in the
United States and Mexico, which conflict by, among other things,
creating radically different liabilities for Vitro in the United
States and Mexico, and Vitro and its customers having to defend
against serial creditor enforcement actions in the United States,”
writes the company.
The court’s order granting the stay of the TRO does not provide
a specific deadline for when the TRO will now expire, but is “pending
further order of [the court].” Additionally, the court has
denied a motion by Vitro for expedited consideration of its appeal.
Stay tuned to www.glassBYTEs.com™
for the latest updates as they become available.
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