Vitro Reviewing Legal Alternatives in Response to Fifth Circuit Ruling not to Enforce Vitro's Mexican Restructuring Under Chapter 15
SAN PEDRO GARZA GARCIA, NUEVO LEON, Mexico, Nov. 28, 2012 /PRNewswire/ -- Vitro S.A.B. de C.V. (BMV: VITROA) announced today that the U.S. Fifth Circuit Court of Appeals in New Orleans, Louisiana, has affirmed the Bankruptcy Court's ruling that denied enforcement of the Company's Mexican restructuring plan in the U.S. under Chapter 15 of the U.S. Bankruptcy Code.
"We are disappointed by the Fifth Circuit Court's decision in this matter. The refusal to reverse the Bankruptcy Court's decision and enforce Vitro's Mexican restructuring in the U.S. is contrary to prior Mexican restructurings, which have been recognized and enforced in the U.S. without exception, including several restructurings which were very similar to Vitro's in their treatment of intercompany claims and modification of non-debtor subsidiary guarantees," said Claudio Del Valle, Vitro's Chief Restructuring Officer.
Mr. Del Valle further added: "While we analyze the Circuit Court's ruling and consider our possible legal next steps in order to have our restructuring plan enforced in the U.S. as it has been in Mexico, we are also prepared to continue serving our U.S. customers due to the fact that our main subsidiary is protected by a separate and distinct Concurso proceeding. In Vitro's 100-year history we have overcome many challenges, and this will be no exception."
Vitro's financial restructuring was fully consistent with Mexican law, which has been consistently recognized and respected in the U.S. legal system. The dissident funds' attack on the use of intercompany debt in Vitro's financial restructuring is simply an attempt to create an appearance of impropriety using baseless accusations. In fact, the dissident funds chose to ignore the well-established and clear principle that all claims are treated equally and permitted to vote under Mexican bankruptcy law, even if they are held by an entity related to the debtor. This principle is similar to the insolvency regimes in several other countries, including the UK, Australia, and Italy.
On Friday, November 23, 2012, the Second Circuit Court in the City of Monterrey, Mexico issued a decision, (notified November 26, 2012), regarding the appeals by certain dissident bondholders and Vitro with respect to the ruling recognizing and establishing the priority of claims in the prepackaged Mexican Concurso proceeding commenced by the Company and a majority of its creditors. The judge ruled that the dissident bondholders' grievances were without merit, and also affirmed Vitro's challenge regarding the calculation of interest the bondholders are attempting to collect.
The group of highly sophisticated short-term investors who are very familiar with, and specialize in bankruptcy litigation, invested in Vitro's distressed debt either after or shortly before Vitro announced its intention to enter a judicial restructuring process in Mexico in a calculated attempt to maximize their profits by seeking to disrupt that process and sidestep Mexican law.
Despite receiving one of the highest recoveries in the history of successful reorganizations in Mexico, the dissident funds have continued to intentionally risk the destruction of Vitro's businesses for the mere prospect, not guarantee, of a slightly higher return on their investment. The dissident fund investors are sophisticated investors, the vast majority of whom purchased their bonds with full knowledge of Vitro's restructuring plans.
Vitro, S.A.B. de C.V. (BMV: VITROA), is the leading glass manufacturer in Mexico and one of the world's major glass companies, backed by more than 100 years of experience in the industry. Founded in 1909 in Monterrey, Mexico, the company currently has subsidiaries in the Americas, which offer quality products and reliable services to meet the needs of two different types of business: glass containers and flat glass. Companies of Vitro produce, process, distribute and market a wide range of glass articles which are part of the daily life of thousands of people. Vitro offers solutions for multiple markets including food, drinks, wines, liquors, cosmetics and pharmaceuticals, as well as the architectural and automotive. The company is also a supplier of raw materials, machinery and equipment for industrial use. As a socially responsible company, Vitro implements various initiatives to contribute to improving the quality of life of its employees, providing support to the communities where it has presence, preserving the environment and favoring an ethical and transparent management. For more information, please consult the website: http://www.vitro.com
This announcement contains statements about future events regarding Vitro, S.A.B. de C.V. and its subsidiaries. While Vitro believes that forward-looking statements are based on reasonable assumptions, all such statements reflect Vitro's current views with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in this press release. Many factors could cause Vitro's actual results, performance or achievements to be materially different from anticipated future results, performance or achievements that may be expressed or implied by such forward-looking statements. In particular, completion of the offers described above or the Concurso Plan on the basis described, or at all, is uncertain. Vitro does not assume any obligation to, and will not, update these forward-looking statements.
For further information, please contact:
Roberto Riva Palacio
Vitro, S.A.B. de C.V.
+ 52 (81) 8863-1661
Jesus N. Medina
Vitro S.A.B. de C.V.
+ 52 (81) 8863-1730
Kay Breakstone /
(646) 452-2332 / 2334
SOURCE Vitro S.A.B. de C.V.
Browse our custom packages or build your own to meet your unique communications needs.
Learn about PR Newswire services
Request more information about PR Newswire products and services or call us at (888) 776-0942.