Abascal, Jose Maria

English

University of New Mexico

United States - Mexico Law Journal
Volume 10 Presentations at the Tenth Annual
Conference Article 11
3-1-2002
Creation and Implementation of the Ley de
Concursos Mercantiles
Jose Maria Abascal
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Recommended Citation
Jose M. Abascal, Creation and Implementation of the Ley de Concursos Mercantiles, 10 U.S.-Mex. L.J. 45 (2002).
Available at: https://digitalrepository.unm.edu/usmexlj/vol10/iss1/11
CREATION AND IMPLEMENTATION OF THE LEY DE
CONCURSOS MERCANTILES
LIC. JOSt MARIA ABASCAL
Last year, the new Ley de Concursos Mercantiles (Business Reorganization Law)'
was presented to the public. The committee that authored the new law anticipated
what would happen with the law, and there is nothing surprising about what has
happened with it. During the drafting of the law, in the Secretaria de la Hacienda
(The Ministry of Finance)2 there was a young economist who was very clever,
although he had no experience litigating bankruptcy cases. After much argument
about a particular provision that establishes when a debtor is deemed to be
insolvent3 , he got his proposed provision inserted into the law. The draft of the new
law moved through several steps for consultations and then went to the Congress.
Although that provision remained in the law, the Congress amended the provision.
After the adoption of the law, he and I spoke and he said, "I'm very sad because
they destroyed my provision with such terrible amendments."
I said, "You remember, you destroyed my draft because you introduced the
provision. But let me tell you, I'm happy that neither you nor I got what we wanted.
I am happy that we have a law which is the result of compromise of all the interested
parties, making it the best law."
The new Ley de Concursos Mercantiles is exactly that, a compromise. The
following are positive results in the new law. First, is the establishment of the
Instituto Federal de Especialistas de Concursos Mercantiles (Federal Institute of
Business Reorganization Specialists)', or the "Institute", as it is called. The
Institute, headed by Lic. Luis M6jan, was established exactly the way the
Commission intended. No one participant in the forum of the old Ley de Quiebras
* Jos6 Maria Abascal is presently acting as arbitrator and counsel in international and domestic arbitrations
and litigation, Cerrada Flor de Agua #11, Col. Florida, Mexico, D.F. 01030. Lic. Abascal is Commissioner in the
United Nations Security Council Compensation Commission in the Panel E2, hearing claims filed by corporations
and similar legal entities against the Government of Iraq, for damages caused during the invasion and occupation
of Kuwait and the Gulf War. Lic. Abascal is Professor Emeritus at the Universidad Iberoamericana (Mexico City)
and was formerly Professor at the Universidad Nacional Aut6noma de Mexico where he has taught Bankruptcy
Law, International Trade Transactions and Arbitration. He is First VicePresident of the Barra Mexicana, Colegio
de Abogados (Mexican Bar) Board; a member of the Board of the American Arbitration Association; a Mexican
Delegate to the United Nations Conference on International Trade Law (UNCITRAL); and a member of the NAFTA
Advisory Committee on Private Dispute Resolutions Article 2022. He is Chairman of the Uncitral Working Group
on Arbitration; Chairman of the Arbitration Commission of the Cdmara Nacional de Comercio de la Ciudad de
Mdxico (National Chamber of Commerce of Mexico City); and Chairman, Arbitration Committee of the Consejo
Coordinador Empresarial de Mexico (Mexican Coordination Council of Business Persons). _ic. Abascal is the
author of more than 200 publications in specialized newspapers, magazines and books, on various topics, including
more than 100 weekly articles for the column "Legal Guide" in the Mexican newspaper El Financiero; he is
responsible for the periodic updating of the book Derecho Mercantil (Trade Law), written by Roberto L. Mantilla
Molina; and Coordinating Editor, of Sociedades Andnimas (Corporations), Mexico, 1986, being the author of
Introduction and the chapter on Corporate Stock. He is a Member, Advisory Commission on Private International
Law and International Mercantile Law, Secretaria de Relaciones Exteriores and Member of the Board of Trustees,
Pace University Institute of International Trade Law (New York). Lie Abascal received the Licenciado en Derecho
from the Universidad Nacional Aut6noma de Mdxico (UNAM) in 1960.
1. Business Reorganization Law (Ley de Concursos Mercantiles), Diario Oficial de la Federacion, Article
1, et seq, May 12, 2000.
2. Secretaria Hacienda y Credito Publico, (visited April 10, 2002) <www.shcp.gob.mxl>
3. Business Reorganization Law (Ley de Concursos Mercantiles), Diario Oficial de la Federacion, Article
10, May 12, 2000.
4. Federal Institute of Bankruptcy Specialists (InstitutoFederal de Especialists de Concursos Mercantiles)
(visited on April 10, 2002) <www.ifecom.cgf.gob.mx>
U.S.-MEXICO LAW JOURNAL
y Suspencion de Pagos (Bankruptcy and Suspension of Payments Law) controlled
the process by which a company or individual was reorganized. Now, a group of
people with a wide range of abilities participates in the process, including
accountants, economists, lawyers, and a former bankruptcy judge. That is exactly
what was needed in order to take care of the most important issues in any
bankruptcy. The specialists control several phases of a bankruptcy. A specialist
performs an audit of the debtor and determines the financial status of the debtor.
Another specialist will mediate between the debtor and creditor to try to reach a
settlement. Finally, another will handle any liquidation of assets or reorganization.
So now we have the Institute of the Specialists. It has been very active. They
published the Criterios de Seleccirn yActualizacirn de Especialistas (Standards for
Registeration and Updating of the Specialists)5 and also the rules for the same
purpose published by the Consejo de la Judicatura Federal (Federal Judicial
Cousel)6 . This Institute has many specialists registered as investigators, conciliators,
or trustees. They have several levels of qualification, and they are geographically
distributed in the territory of Mexico. The Institute has published a clearly written
and well organized web page7 full of information with relevant legal texts and rules;
the files of proceedings; and the enforcement of the new legislation; the summary
of relevant information; the names, levels and geographical jurisdiction of the
registered specialists; and miscellaneous information.
Another positive aspect of the new legislation is that we no longer have the
Suspencion de Pagos (Suspension of Payments). This cannot be done anymore.
The only cases with suspension of payments that remain are those under the old law.
There are some criticisms of the new law. The commission that drafted the law
discussed all of the criticisms of the new legislation, so they were expected. None
of the criticisms are unexpected or unheard of, except for one, which will be
discussed later.
In order to introduce these criticisms, I will note a paragraph from Machiavelli:
"It is worthwhile to remember that nothing is more difficult to plan, success
more dubious, more difficult to manage, than to create a new system. He who
initiates it has the enmity of all who benefit from the old institution and only
mild support from those who will benefit from the new system. The doubts of
those benefiting from the new system arise from fear that the old law favors their
enemies and from the general skepticism of mankind toward an innovation until
experience demonstrates its value in practice."
That is what has happened with the new law. The old class of litigators, who
where used to the old law have criticized it since its inception and have continued
to do so. They did exactly the same when Mexico adopted the model law on
arbitration, and now they are very happy with it. They said that there are some
problems on constitutionality. I am unaware of any amparos (Constitutional
challenges) against the law. But, those are to be expected.
5. Federal Institute of Bankruptcy Specialists (InstitutoFederal de Especialists de Concursos Mercantiles),
(visited on April 10, 2002) <www.ifecom.cjf.gob.mxleyes-reglamentos/criteriosseleccion.asp>
6. Business Reorganization Law (Ley de Concursos Mercantiles), Diario Oficial de la Federacion, Article
311, May 12, 2000.
7. Federal Institute of Bankruptcy Specialists (InstitutoFederal de Especialists de Concursos Mercantiles),
(visited on April 10, 2002) <www.ifecom.cgf.gob.mx>
[Vol. 10
Spring 2002] CREATION AND IMPLEMENTATION OF THE LEY DE CONCURSOS 47
Critics say that the new bankruptcy law is too complex and impractical, and that
there are very few bankruptcy claims now. Of course, they do not recognize that
this is because there are no claims for suspension of payments under the new law.
Under the old law, there were not more claims per year on average than under this
new law. According to the report by the Institute, twelve cases have been filed.
Four were terminated for different causes, such as withdrawal by the petitioner or
lack of deposit of the Inspector fees, which may result from settlement by the
parties. One is in the prejudgment period. One case is in the conciliation period.
Two cases are in the bankruptcy period with a Trustee in charge.
In Mexico, not only because of the complexity and newness of this law, but also
because of a general distrust of the old law, we tend to avoid insolvency
proceedings. In the history of the old law, from 1943 to now, there were about 400
cases filed. Thus, twelve cases filed this year is not a small number. There are some
other reasons that justify this tendency. In the period of the old law, the Mexican
economy was not very strongly developed. A lesser-developed economy does not
have many insolvency proceedings. Therefore it is expected that in the future, this
law is going to be relied upon more often as time passes and the Mexican economy
grows. The tendency for bankruptcies is going to increase. Not as much as in the
United States, because the United States has a bankruptcy procedure for every kind
of situation: physical persons as well as commercial traders. So the spectrum of the
insolvency proceedings in the United States is wider than the spectrum in Mexico.
As this law is better known, it will be more appreciated. It is going to be of great
benefit for Mexico.
Further Amendments to the Ley de Concursos Mercantiles:
There is a tendency in the new laws that have been adopted in several countries
to provide for review and amendment in three, four, or five years after adoption.
That happened in France and in Germany, among other countries. There is no such
provision in the Mexican law, but it is the understanding that the same will occur in
Mexico. After two or three years of experience, some amendments will be required.
One of the amendments that will be required in the future is to the debtor insolvency
provision, referred to at the beginning of these comments. This provision 8
establishes when a debtor is deemed to be insolvent based on objective factors that
any person can see. The next provision9, which substantially weakens the law,
established a lot of criteria to determine if the debtor must be put in insolvency.
This data depends on the accounting of the debtor, which the creditor does not
know. In Mexico there is no pre-trial discovery, which would permit the creditor to
better understand the financial circumstances of the debtor before commencing a
bankruptcy proceeding. The creditor who files a petition to declare a debtor
bankrupt must now act more or less in a blind situation.
That per se is not tremendous problem. The tremendous problem is that there is
another provision that establishes that if the petitioner does not succeed, then he or
8. Business Reorganization Law (Ley de Concursos Mercaoniles), Diario Oficial de la Federacion, Article
10, May 12, 2000.
9. Business Reorganization Law (Ley de Concursos Mercantiles), Diario Oficial de la Federacion, Article
11, May 12, 2000.
U.S.-MEXICO LAW JOURNAL
she must pay the cost of the procedure and the fees of the Inspector'0 . So whoever
files the petition of concurso (reorganization) is somehow making a guess and
somehow risking some money. The cost, according to the law, is four percent of the
amount in dispute. One way to see it is to say, "I'm going to risk four percent. I'm
earning 12 percent interest so this year I'm going to risk earning only eight percent."
This is a big problem. There are other issues that should be reviewed very soon in
order to find ways to improve this new law.
10. Business Reorganization Law (Ley de Concursos Mercantiles), Diario Oficial de la Federacion, Article
48, May 12, 2000.
[Vol. 10


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