Vitro Restructuring Faces Court Order

A New York Court has slapped a temporary restraining order on Mexico’s Vitro, preventing its subsidiaries from approving a controversial $3.6bn debt restructuring plan that has irked foreign bond holders. Judge Bernard Fried, of the NY State Supreme Court, has ordered Vitro subsidiaries to “withdraw their consent” to the plan. Under the restructuring, Vitro would relieve its subsidiaries of serving as guarantees for outstanding debt. Vitro plans to appeal the ruling, Roberto Riva Palacio, a Vitro spokesman, tells Latin Finance. Riva Palacio points out that Vitro’s legal team set up a Monday hearing with Federal Bankruptcy Judge Harlin D. Hale who approved Vitro’s Chapter 15 filing, to request a stay of this order. Riva Palacio could not immediately comment on what the standing restraining order means for the already-approved restructuring plan. The glassmaker used roughly $1.9bn in intercompany debt to give it enough voting power to approve what was largely an unpopular restructuring plan for other creditors. As it stands, the company’s restructuring proposal includes $814.7m in new 2019 bonds, a fee of up to $32.7m and mandatory convertible debt of $95.8m. JPMorgan has estimated that creditors who accept the deal may recover between 48 and 60 cents on the dollar, depending on the level of debt-holder support. Vitro’s move has aggrieved bondholders and caused other investors to worry about the repercussions that a successful restructuring such as Vitro’s could mean for Mexican debt investors in the future.