Vitro’s Troubles Continue

Beastie vitro close up

Dec 5 (Reuters) – The United States Bankruptcy Court for the Northern District of Texas ordered that 10 units of Mexican glassmaker Vitro S.A.B. de C.V. (“Vitro”) be put into U.S. bankruptcy, and found that several of them had taken secret steps to prevent creditors from collecting money owed to them.

Several U.S. hedge funds, led by Aurelius Capital Management and Elliott International, hold defaulted notes guaranteed by the subsidiaries and sought to put the units into bankruptcy. After the hedge funds sought involuntary bankruptcy proceedings, five of the subsidiaries secretly reincorporated in the Bahamas and one of the subsidiaries was sold, according to Judge Harlin Hale, the U.S. bankruptcy judge presiding over the cases.

“These acts were taken, apparently, to prevent creditors with guarantee claims from taking steps to collect on their judgments,” Judge Hale wrote in his  recent opinion this week.

In response, the Company said that “[t]he impact of the ruling on Vitro is minimal given that the entities placed into bankruptcy by the ruling constitute a very small portion of Vitro’s global business enterprise.”  It also noted that its main subsidiary was protected by a Mexican reorganization proceeding.

As previously discussed in earlier submissions, Vitro went through a $3.4 billion bankruptcy reorganization in Mexico. U.S. creditors have strenuously opposed that plan, which substantially reduced creditor recoveries while preserving $500 million of equity for shareholders of Vitro.  Vitro’s foreign proceeding was the subject of separate  chapter 15 proceeding, pending in the U.S., to recognize and enforce the results of Vitro’s Mexican Concurso proceeding.

Judge Hale has declined to enforce the Mexican plan on U.S. creditors, finding it was contrary to U.S. policy.  Last month, the U.S. Fifth Circuit Court of Appeals  affirmed Judge Hale’s decision to deny enforcement.



Categories: Recent News

Tags: , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: