Vitro Restructuring Sees Setback

A US court has denied Vitro’s request to enforce its Mexican bankruptcy plan in the US, the Mexican glassmaker says. Though the court has decided to uphold Vitro’s reorganization plan – approved in Mexico earlier this year – at the Vitro SAB level, it has refused to enforce the release of Vitro’s US subsidiaries from liability on their guarantee obligations under Vitro’s now-restructured bonds. It found that the Concurso Mercantil (LCM) plan approved in Mexico which extinguishes the guarantee claims of objecting creditors that were given under a formal legal agreement or indenture in the US against non-debtor entities that are subsidiaries of Vitro should not be recognized. “Such order manifestly contravenes the public policy of the United States,” Judge Harlin Hale wrote. Hale found Mexico’s LCM to be a fair process and worthy of respect, but that in this case the Concurso plan discharges the unsecured debt of the non-debtor subsidiaries. “The judge chose not to criticize Mexico but picked on those things that were thoroughly incompatible with the US bankruptcy code and US policy,” American University professor Arturo Porzecanski tells LatinFinance. Vitro says it will appeal the court’s refusal to enforce the Vitro restructuring at the subsidiary level. So far, no US bankruptcy court has ever denied a request to enforce a plan of reorganization approved under the Mexican bankruptcy law in its 12 year history. The court will stay its decision until June 29 to give Vitro time to seek an appeal.