Vitro's Mexican reorganization plan partially enforced by U.S. court

By Caroline Salls

Pittsburgh, June 14 - Vitro SAB de CV said the U.S. Bankruptcy Court for the Northern District of Texas has ruled that it will enforce part of the company's Mexican plan of reorganization in the United States.

According to a company news release, the bankruptcy court agreed to enforce the Mexican plan in the United States in connection with Vitro, but did not enforce the release of the company's subsidiaries from liability on their guaranteed obligations under Vitro's now-restructured notes.

Vitro said it intends to immediately appeal the court's refusal to enforce the Vitro restructuring at the subsidiary level to the U.S. Court of Appeals for the Fifth Circuit.

The company said the ruling by judge Harlin D. Hale recognizes that the Mexican bankruptcy process affords all creditors fundamental fairness and due process, as required by Chapter 15 of the U.S. Bankruptcy Code in order to enforce a restructuring plan approved in a foreign proceeding.

Although the bankruptcy court refused to enforce the release of Vitro's subsidiaries, which was also approved by the Mexican court, Vitro said it does not expect the refusal to materially impact its ability to serve its U.S. customers.

The company said one of its key subsidiaries in the supply of products to U.S. customers is currently protected as a debtor in a separate and distinct concurso proceeding in Mexico.

"We are pleased that the court has recognized the validity of the concurso process generally, and enforced the Mexican court's order approving the company's plan of reorganization with respect to Vitro SAB," chief restructuring officer Claudio Del Valle said in the release.

"Today's ruling is important for all of our stakeholders, including our 17,000 employees, and marks a significant milestone in our successful financial restructuring."

According to the release, Vitro's restructuring complied with applicable Mexican bankruptcy law, which, since its enactment in 2000 by the Mexican legislature, has been recognized by U.S. courts in Chapter 15 proceedings without exception.

Dissident bondholders

Despite one of the highest recoveries in the history of these processes in Mexico, the company said dissident funds "have and continue to intentionally try to risk the destruction of Vitro's businesses for the mere prospect, not guarantee, of a higher return on their investment."

Vitro said the portion of the bankruptcy court's decision that enforces the plan in the United States represents another loss for the group of dissident bondholders that waged a strong opposition to enforcement.

The company said it expects the dissident bondholder group to appeal this part of the decision, also to the U.S. Court of Appeals for the Fifth Circuit.

Vitro is a Nuevo Leon, Mexico-based glass manufacturer. Its Chapter 11 case number is 11-32600.

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