KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER MEXICAN LAW -

Preface -

On 12 May 2000, the Commercial Insolvency Law (the “CIL”) was published in the Federal Official Gazette, and it entered into full force and effect the next day. This law replaced the 1943 Law governing the Suspension of Payments and Bankruptcy, and all other legal provisions that opposed the provisions of the new CIL.

Pursuant to its preface, the CIL has the principal purpose of creating a modern regulatory framework that allows the conservation of companies undergoing a financial and economic crisis. To this end, the figure of ‘conciliation’ was created to make sure that the merchant and its creditors reach an agreement for the payment of the merchant’s liabilities over a reasonable period. If reaching a reorganization agreement is unfeasible, the CIL establishes a procedure for the orderly liquidation of the merchant’s assets and rights while attempting to maximize the proceeds of the sale, applying the funds obtained therefrom to the payment of the merchant’s liabilities, following a fair order and preference regarding the differences between the relevant creditors.