The Mexican Case The Road to Maximizing Recovery The End Game Making sure there are assets The Process Making sure the collection process is as painless and efficient as ID: 784924
Download The PPT/PDF document "Latin America - Trade Creditors' Right..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Latin America -
Trade
Creditors' Rights and Protection
The
Mexican
Case
Slide2The Road to
Maximizing Recovery
The End Game. Making sure there are assets.The Process. Making sure the collection process is as painless and efficient as
possible.
2
Slide3The End Game - Common
hazards The poor company, rich businessman conundrum. This is true in Mexico and generally throughout Latin
America.No corporate veil piercing or equivalent theories are generally available. This is true in Mexico and generally throughout Latin America.
3
Slide4Doing The Homework
Due diligenceDue diligenceDue diligence
4
Slide5Collateral Options
Personal guaranteesMortgagesPledges
Trusts in guaranteeLetters of credit
5
Slide6The
Process – Navigating through the Mexican Legal SystemFederal system
Convergence in commercial disputes of Federal and State courtsNo juryVery limited discovery available
Reliance on documentary
evidence
Very formal. Favors originals, not copies
6
Slide7The
Right PaperworkAlways aim to document the
credit, and if possible, with so- called “títulos ejecutivos,” i.e. executive titles
Títulos
ejecutivos
→
right to collect via summary proceedings
Preeminent examples: promissory notes, letters of exchange, agreements certified before Notary Public with amounts quantified
,
due
and
payable
.
7
Slide8Advantages of
Summary Proceedings
Prejudgment attachment of assetsLimited defenses available to the
debtor
Shorter procedure
8
Slide9Tips to Draft
an
Enforceable Promissory Note
The express statement that the document is a
pagaré
.
The unconditional promise to pay a
certain
amount of
money.
The name of the company or
individual to
whom the payment is to be
made.
9
Slide10Tips to Draft
an
Enforceable Promissory Note
The time and place where the payment is to be made.
The
time and place where the note is
subscribed.
The
original signature of the issuer of
the note.
10
Slide11Tips to Draft
an
Enforceable Promissory Note
When the issuer/debtor is a corporation, make
sure:
that
the individual signing the note has
express authority
to sign or issue credit instruments (
títulos
de
crédito
) on behalf of said
corporation
that
the act of signing promissory notes or
credit
instruments is provided for under its
corporate purpose
11
Slide12Enforcement of
Foreign Judgments
Service of process properly done? In rem action?Did the foreign court had jurisdiction?
Res judicata?
Pending parallel action in Mexico?
12
Slide13The Arbitration Alternative
Mexico has a modern arbitration law and a generally pro arbitration judiciary.
Mexico adopted in 1993 the United Nations Commission on International Trade Law (Uncitral) Model Law on International Commercial Arbitration.
13
Slide14The Arbitration Alternative
Mexico is party to:The
Convention On The Recognition And Enforcement Of Foreign Arbitral Awards -- New York Convention (1958).The Inter-American Convention on International Commercial Arbitration -- Panama Convention (1975)
14
Slide15Advantages of
ArbitrationAvoidance of local courts
Easier to enforce arbitral awards in comparison to foreign judgmentsAbility to choose decision maker
Proceedings can be in
English
Seat of arbitration can be the
US
Governing law can be US
law
15
Slide16Drafting the
Arbitration Agreement
Bind
the
parties
Exclude
judicial
intervention
Empower
the
arbitrators
Establish
a
procedure
for
airing
the
dispute
16
Slide17Pathological Clauses
Equivocation“in case of dispute, parties agree to submit to arbitration, but in case of litigation, Mexican courts shall have jurisdiction.”
Over-SpecificityIncluding too much detail which makes impossible to put into practice. E.g.: “Arbitrators shall be experts in nanotechnology.”
17
Slide18The Case of Insolvency
“When?”
Debtor has “generally defaulted on its payment obligations”:(1) default vis-à-vis at least two creditors;
(2) payments are past due for more than 30 days and represent 35
%+ debtor's
payment obligations;
and/or
(3) the debtor does not have liquid assets
to
pay at least 80% of the obligations past
due.
18
Slide19The Case of Insolvency
“Who can file it?”
Debtor, creditors, or the Attorney General can file. Debtors can file if conditions are imminent.Creditors need to meet all three
conditions or will have to pay all
attorneys' fees and
other expenses
incurred by the
debtor.
19
Slide20The Case of Insolvency
“How?”
Two consecutive stages:the conciliation stage akin to Chapter 11.
the
liquidation
stage akin to Chapter 7.
20
Slide21The Case of Insolvency
“Who gets paid?”
1. Wages for the last two working years prior to the date of the declaration of insolvency and employees’ severance claims.
2. Claims
related to the administration of the estate.
3. The
fees and expenses charged by the Auditor, Conciliator, Trustee and their assistants in the performance of their
duties.
4.
Funeral
expenses and medical expenses incurred with respect to illness leading to death, when the debtor is a natural
person
.
21
Slide22The Case of Insolvency
“Who gets paid first?”
5. Secured creditors.6. Tax Claims.
7. Creditors
with a special privilege. Creditors with special statutory privileges such as
a "right
to withhold."
8. General
unsecured creditors.
22
Slide23Latin America -
Trade
Creditors' Rights and Protection
The
Mexican
Case