After the US recession and bad bets on derivatives contracts sent Mexican glassmaker Vitro SAB into bankruptcy, the company now has a restructuring plan in place for Mexico. On 5 June, Vitro asked the US Bankruptcy Judge, Harlin DeWayne Hale in Dallas to enforce the plan and stop litigation by debt holders who have been fighting to collect on $1.2BN in defaulted bonds. According to Madlyn Primoff, a bankruptcy attorney at Kaye Scholer LLP in New York, the judge must weigh whether the Mexican court's approval of Vitro's plan should be given defence or it conflicts too much with US law and should be rejected. Vitro and bondholders have been fighting over the restructuring in Mexican and US courts, with creditors suing Vitro subsidiaries that guaranteed company debt to recover what they're owed. The company wants to put an end to the litigation and says that bondholders want to "bring Vitro to its knees by destabilizing its business and interfering with its relationships with its customers." Andrew Leblanc, attorney for Vitro, told the judge that the case has been heavily litigated and the Mexican court's approval is "worthy of respect." The bondholders lost in Mexico and are "obviously disgruntled," he said. Hale's decision will probably not resolve litigation over the restructuring plan, and is expected to be appealed. The bondholders' appeal in Mexico of the restructuring there didn't stop it from being implemented. The plan provides $814.7M in new 8% notes and $109.6M in convertible bonds, according to Vitro. According to bondholders, Hale should reject the plan in part because shareholders are retaining value while creditors are not being paid in full. They also oppose discharging the guaranty obligations of subsidiaries even though the units are not in bankruptcy. Enforcing the plan would undermine international credit markets and raise the cost of capital in emerging markets, they said.
