The origin of the LCM has two purposes, on the one hand, reduce procedural abuses that are provided by the procedure of the Bankruptcy Law, and suspension of payments, and, on the other hand, the introduction of a new trend in the treatment of problems of insolvency in commercial matters.
The first point is mainly achieved through the introduction of several new measures of a procedural nature, as are the dimensions of the deadlines applicable to the procedure, not the accumulation of other procedures and reducing the causes of suspension of the procedure, among others. Another important step to achieve this objective was the creation of the Federal Institute for specialists of Mercantile Contest (Ifecom), which is responsible for the supervision and to some extent on the control of the competition procedure, through its specialists, avoiding that the control of the procedure is entirely in the hands of the trader as was the case with the suspension of payments in accordance with the law repealed.
The second point, that is to say, the new trend in the treatment of the commercial insolvency, has been developed to a greater extent in common law countries, and it is inherent to the prevailing economic system in most of these countries. This current part of the free market system encourages risk-taking, that is to say, the participation in business and new products, creativity, or as they say in English-speaking countries, to entrepreneurs, which has as a natural consequence the possibility that the new business didn't work as expected and, therefore, fail. However, it is a matter of distinguishing the cases in which the competition is derived from mismanagement on the part of the trader, in which case, a punishment is appropriate, and cases in which the business failure is not due to negligence or malice on the part of the trader. Both assumptions should not be treated equally, especially if you want to encourage creativity and productivity. In our country, insolvency can be a bad mark to accompany the merchant all his life, even when the situation has been out of your reach. This current North American trend looks to include the insolvency caused by reasons beyond the merchant, as a possibility in the world of business, which receives a special treatment and ignores all kinds of retaliation and punishment to the merchant. This treatment is to first look for saving a company (rescue) to avoid the losses for which a bankruptcy could bring to their creditors and to the society. If the bankruptcy cannot be avoided, you will have to divide the company to pay the amounts owed to the creditors of the trader to the greatest extent possible. If the company's failure was not due to a willful conduct or gross negligence of the owner or administrator, you do not have to have penal consequences or punishment toward these people. It is a business that is terminated by the distribution of the assets of the merchant, physical or moral person, as the case may be, between your creditors. For these purposes it is very valuable for us, a figure of limited liability that attaches the General Law of mercantile companies to public limited companies and limited liability companies, according to which the partners or shareholders respond only up to the value of their contributions to society, which is why your personal assets are not suppressed1 One of the main objectives of the limited liability in societies was precisely encourage participation in the mercantile business. The LCM only provides an efficient method and fair to all parties involved to end up with a business that has failed.
The procedure governed by the LCM is divided into three parts: the stage prior to the contest, the conciliation and bankruptcy. The first stage is essential, the second and the third may be alternatives.
The procedure is directed by a district judge with jurisdiction in the home of a merchant, and each of the stages is responsible to a specialist of the Ifecom, the first requires the intervention of a visitor, the second of a conciliator and the third of a liquidator. The goal of the first stage is to determine whether they meet the assumptions for the declaration of the insolvency. It begins with a demand or request for competition that may be presented to the judge the merchant, the creditors or the Public Prosecutor. The judge orders the Ifecom the designation of a visitor who in a period of 15 to 30 days you must pay an opinion on the situation of the company of the merchant. There is a period to the merchant to answer the demand, and a period for pleadings. In the event that was deemed appropriate the declaration of the contest, the judge gives the judgment of statement of insolvency, which initiated the conciliation stage. The first stage should not take more than a month and a half.
The objective of the second stage is that an agreement is reached between the merchant and his creditors to avoid carrying the trader to the bankruptcy, agreement that is documented by the signature of a convention. The duration of this stage is 185 to 365 days, and starts with the judgment of statement of insolvency. In the case of a society, bankruptcy, this is the third stage, it should only take place when the society does not have economic viability. The objective of a bankruptcy must be the dissolution and liquidation of the society. This process involves the distribution of the goods of society among its creditors, to the extent to pay off the debts of the society, and after its liquidation. Bankruptcy, in the case of individuals, is another treatment that deserves to be tackled separately. In this article, which I always refer to a company or a trader, I will be referring to the business of a mercantile society, excluding the case of individuals.
It seems that the LCM confuses the desire to save (rescue) the company for the purpose of the bankruptcy. First I'll explain the theory behind the desire to save the company and then make the distinction between this theory and purpose of the bankruptcy.
When an insolvent company is viable and, therefore, has the potential to go forward with a change in its structure and in its administration or through changes to its operation, the objective must be to conserve the company, regardless of the desire of the merchant.2 The LCM allows the merchant to unilaterally decide going bankrupt, bypassing the conciliation stage. If you are going to pay a visitor who is going to have about a month to review the accounting of the merchant, the least he could do the visitor is to determine if the business is viable and if you can avoid bankruptcy. If the result of the assessment is positive, the judge should follow with the conciliation stage and the conciliator should arrogate to achieve the best agreement with creditors, regardless of the desire of the merchant, for the reasons outlined below.

It must be remembered that the insolvency of a company involves in addition to the partners or shareholders of the company, all its creditors. In an insolvency process, the creditors are not only the "creditors sophisticated", that is, the banks or financial institutions, but all the people who in one way or another have given credit to the society, as are its employees, their suppliers, the same consumers or customers, and even that involuntary creditors never voluntarily contracted with the company, as may be the case of a person to whom the company may have to pay damages arising from civil liability.
A company is located in an insolvency situation when their liabilities are higher than their active.3 In other words, in a situation of insolvency, the assets of the society do not to pay their debts. Hence, looking at the big picture, all the assets of the society are intended as payment to the creditors. It is clear that not all the debts of the creditors are going to be satisfied, on the basis that the goods of the society are not sufficient to pay for a pro rated payment to creditors (except in the case of secured creditors that I'll discuss later). Therefore, we can say that from the moment a company enters into a state of insolvency, the main interests to be protected are those of creditors, if the property is insufficient to pay the debts of the creditors, less is going to be for the partners or shareholders of the company, which are always at the end of the list is reimbursed their contributions. That is why the management of the property owned by a company insolvent, would benefit or disadvantage exclusively to the creditors, then why would you leave at the discretion of the trader determine whether the company should be or not to go the bankruptcy?, especially when the company is economically viable.
Once that has been clarified the goal to save the company, there is that distinguish the moment at which it is appropriate to do so. The LCM constantly points out that one of the objectives of the "bankruptcy" is to sell the company. I would like to know who is going to acquire a company that has more debts than assets, and that, therefore, has negative numbers, which he also spent a year in the conciliation stage by specialists who have not been able to pull forward, it was not possible to reach an agreement with the creditors of the same, their debts remain and their problems also. Except for the federal government, which we hope will not continue to carry out this type of business, it seems that there can be no a buyer.
When a company reaches the stage of bankruptcy is because he had no solution. The purpose of bankruptcy is liquidating the company, equates to the liquidation of a society, the trustee pays the debts to the extent possible through the sale of assets of the society and subsequently the liquid. If someone had been interested in buying the company as a unit, it implies that someone is interested in further earlier, so that the bankruptcy has no place. The time to try to sell the company as a whole in operation with the aim of achieving the lower losses is possible before the conciliation stage. Remember that the conciliation stage begins with a judgment declaring that the insolvency trader and that is published at the national level. From the time of publication of the judgment, the operation of the company can be severely affected, all creditors will get nervous to try to get their payments, neither consumers nor the suppliers are going to want to keep taking credits, and very probably they're going to want to terminate their contracts with the company, the operation of the company will be further complicated and it will become increasingly more difficult for a company find investors who are willing to take a risk so great, what will eventually end with the possibility to save the company, and the above cannot be avoided: before the insolvency of the debtor, the creditors usually have a very high risk of losing if not the most part, an important part of their claims. The creditors will have to conform to the procedure for trying to collect their existing loans, but as they say colloquially who you are going to want to put more good money for a bad cause? Hence that the opportune moment to try to sell the company as a whole is during the process of visitation, once the visitor determine if the business is viable and if you have solution, you will be able to search for a buyer before making the matter public, and probably will not have to start the conciliation stage, not have to learn all the creditors, and the news reaches the public, not as a case of insolvency, but as a merger or a sale.
Now, let's move on to analyze in particular some of the articles of the LCM that deserve comments. Due to lack of space, I will limit myself to commenting on only the cases that I feel are most important.
1. Case of insolvency
Assumptions made by the LCM to the declaration of a trader in insolvency limit the possibility of declaring a merchant at contest and distorted the meaning of insolvency or bankruptcy. A merchant is insolvent when unable to meet their obligations, and this may occur for two reasons: (a) because the total amount of the liabilities of a person is greater than the total amount of their assets, or b) because of a lack of liquidity. Therefore, it is irrelevant whether this person has only one creditor or more, if you have titles value or not, if its accounts receivable expire before or after 90 days, because in a particular case a merchant can be seen in any of the cases a) or (b) above, even when not complies with the requirements of the MCA, and we're going to have to a merchant in a state of insolvency that cannot be legally declared in insolvency by lack of compliance to re-requirements too specific and unnecessary to declare a person in insolvency. The inability to declare a person insolvent who in fact is broke only going to bring serious consequences to their creditors, especially to those who do not have a real guarantee for the payment of its obligations.
The test to determine whether a person is insolvent is very simple, and does not have to be subject to discretion, is a mathematical proof: more liabilities than assets. They can be determined by the visitor while reviewing the financial statements of the company in question.
2. Payment of bonds
The LCM includes several assumptions in the granting of bail or guarantees, either to initiate the procedure of insolvency, to prevent the execution of procedures derived labor on goods of the earth, or to avoid the imposition of protective measures, among others.
It seems a laudable solution: neither harm nor the merchant or to their creditors to ensure the order of the judge. However, it seems that we forget that the purpose of the LCM is to regulate insolvency situations. The problem that an insolvent trader faces is precisely that it does not have sufficient assets to meet its obligations to its creditors. A guarantor goes only to issue a bond if it receives a sufficient guarantee for the repayment of the amount that is required to be paid by virtue of the bail. In an insolvency situation who is going to give such a guarantee? Now, let's move on to analyze the situation of each of the parties involved.
A. secured creditors

There are basically two types of creditors in a contest: the secured creditors with collateral to whom I refer to hereafter simply as secured creditors and unsecured creditors. Secured creditors are typically win out, because they have in their favor a levy on a well of the merchant who will surely be of sufficient value to cover all his credits; however, it is precisely for this reason, secured creditors usually do not contribute to all expenses of the earth, only contribute to the costs of the goods that the guarantee, and in many countries do not even have to enter the contest, because taxes on goods guaranteed may run out of competition. So while the majority of creditors will fight for the few goods that there is in the earth, the secured creditors can collect their credits with all and interest, if the value of the secured asset allows it. Here that if the results of the competition did not affect their interests, secured creditors usually do not have to worry about to grant bail. It should be noted, however, that in Mexican law secured creditors have a quirk that I'll discuss later: the arrears and compensation of workers in the trader, earned during the year prior to the date of declaration of the insolvency have preference, which modifies a little procedure used for the enforcement of security interests at the international level.
B. Unsecured creditors
The case of the unsecured creditors is far from being so favorable. As I had already mentioned, the types of unsecured creditors can be very variable, from employees of the merchant, their customers, suppliers, consumers, until any person affected by a case of civil liability. Except in the case of the employees of the merchant, the other unsecured creditors assume the risk of receiving payment in an extremely low percentage of their claims, if they're lucky, as we shall see below.
As has already been pointed out, the assets of the merchant is going to be enough to pay all their credits, and it is likely that the most valuable assets of the trader guarantees are subject to area-them, and, therefore, are not going to be able to use to pay for the unsecured loans. In addition, with the assets of the estate must be paid all the credits indicated below in the order indicated: wages and compensation in favor of the workers earned during the year previous to the declaration of the contest, the fees of visitors, conciliators and trustees, in your case, all the costs of conservation and management of the property, the other costs of the procedure, costs of judicial and extra judiciary proceedings for the benefit of the earth, the credits were singularly privileged, loans secured by real collateral, labor credits various to the above, the tax credits, the credits in favor of the creditors with privilege special8 and until the end, after having paid all of the above, it also splits the Remnant of the goods of the earth, in your case, between the unsecured creditors in proportion to the amount of their claims.
It is doubtful that unsecured creditors, with the very high risk of losing an important part of their credits, going to want to make more money or property belonging to ensure the guarantors amounts that will probably not reach to receive.
C. The merchant
On the other hand, it cannot be easy the guarantee of bonds by a merchant, if we take into account the fact that all of its assets are loyal to the payment to their creditors. The debtor may not freely dispose of their property and it seems unlikely that creditors are going to be in agreement that the only possible source of payment for their debts of warranty to the bonding company. In my opinion, the granting of bail is only feasible if the company is commercially viable and if there are big chances of the company follow in operations and recover with a good administration.
3. Costs of the proceedings
With regard to the costs of the procedure of competition, to whom you have to pay the ordinary expenses of the procedure, fees to the specialists (visitors, conciliators and trustees) to intervene in the procedure, and the costs of conservation and management of the goods (to mention some important items)?
On the one hand, the LCM points out in his article 28 that "the merchant or the creditors’ plaintiffs shall bear the costs of the process, among others the fees of the visitor and, in his case, the conciliator". Also, in accordance with article 24 of the LCM, for which the writ of request or demand for insolvency continues to have effect, it is essential that the actor will ensure the fees of the visitor. On the other hand, article 224, section V, we noted that the fees and expenses of the visitor, conciliator and trustee are "claims against the earth", or, in charge of the merchant. There is a contradiction between these articles.
We have already discussed the drawbacks that have each of the parties involved in insolvency to provide more fresh money to the contest, either to grant bail or otherwise ensure the costs thereof. Most usual and reasonable is that the costs of the procedure if they are credits in charge of the earth. It is true that the set aside a portion of the earth to such payments, further diminish the possibilities that have unsecured creditors to see paid his credits; however, without the tender procedure, very probably the payment of their credits would take more time, if they get it. From here which creditors should be required to assume as a part of the risk, the cost of the competition procedure, except that they wish to assume the cost directly.
If those expenses were not generated by the mass, they could only be generated by the creditors or our taxes. We have seen the disadvantages of the creditors to assume these costs. With regard to our taxes, we hope sincerely that are not used to pay the debts of mercantile companies that do not have a public interest and that are not viable or that went bankrupt due to mismanagement of their owners.
However, what will happen when the goods of the earth do not reach even to cover the fees of the visitor? It could be the case of highly leveraged companies or very small that they cannot cover the 1500 days of minimum wage at Distrito Federal to request the insolvency, so what happens then? Article 262, section IV of the LCM points out that the judge shall be terminated by the competition when it is established that there is sufficient property for the payment of the tender procedure, however, to be terminated should have begun at some point, the article 24 of the LCM clearly indicates that the procedure may be initiated only if it ensures the fees of the visitor.
4. Small traders
Probably, for our legislators, the answer to the question posed in the previous paragraph this in the article 5of the LCM, who notes that "the small traders may only be declared in an insolvency when they accept voluntarily and in writing" to LCM.9 It would be useful to know what will happen when those traders go bankrupt in fact, if in accordance with the LCM "may not be declared in an insolvency". It is illogical thinking that small retailers do not have at their disposal an insolvency proceeding. The intention could have been that they have applied the Bankruptcy Law, and Suspension of Payments abrogated (no exceptions) by the MCA, however, if that was the goal, it should have been expressly stated. Such a loophole in the LCM can cause major conflicts to the creditors of the small traders and to the society, because it would appear that can continue to trade on a regular basis, even if they do not have sufficient assets to meet its obligations and, therefore, can be put at risk the payment to their creditors.
If the purpose of the LCM was to create a new procedure for the treatment of insolvent traders to be fairer and best results, access should be given to that procedure to the small traders and their creditors. They don't have to receive treatment as second class citizens, merchants or creditors. On the other hand, if it has been shown that the suspension system of payments was damaging in some cases to creditors by the abuse that made the traders and the non-application of the LCM leaving him in a state of helplessness to the creditors of the small traders who do not wish to be subjected to the same. In regard to the fees of the visitor, it should be allocated a small amount to the Ifecom of the budget of the Council of the Judiciary for expenses related to these cases, and assign to each visitor such cases in a percentage not to exceed a 25 or 30% of its total burden of work, to compensate for such work with the fees they receive, by the cases that if they can afford their fees.
5. Privileged Creditors
Within preferential creditors just want to make reference to the state treasury, secured creditors and landlords.
A. The treasury
Some of the effects of the judgment that declares the insolvency is suspending the payment of the debts incurred by the merchant prior to the contest, except those that are necessary for the ordinary operation of the company, and suspend enforcement procedures against the assets of the trader, during the conciliation stage. Article 65 of the LCM provides an exception rule in relation to the implementation of labor credits for the recovery of claims covered by article 123, section XXIII, of the Constitution of the United Mexican States. In terms of tax credits, reference is made to article 69 of LCM: this article focuses on two assumptions, the payment of tax contributions during the insolvency, and enforcement procedures against the trader's assets for the payment of tax contributions.
Article 69 is very clear as to which suspends the administrative procedures for implementing of tax credits during the conciliation stage; however, it maintains the obligation for payment of tax contributions during this stage, and specifically pointed out that the lack of payment of contributions will continue to cause "updates, fines and accessories", except in the event that the trader to reach an agreement with its creditors. It is interesting the wording of this article under which states: "The judgment of insolvency will not cause for stopping payment of tax contributions or ordinary social security, since they are essential for the ordinary operation of the company". Hence, in opposition to the approach taken in the entire text of the LCM, whereby only obliges the insolvent merchant to make those payments required for the operation of the company, the LCM imposes the merchant an obligation to continue to make "all" the tax payments we make it on a regular basis, and emphatically pointed out to such payments as indispensable to the operation of the company, even when in fact they are not. It is also interesting that the LCM would condone the merchant payment of upgrades, accessories and fiscal fines if reaches an agreement with its creditors. The motivation for such a provision is positive, it is a way to coerce parties to reach an agreement during the conciliation stage; however, it does not apply in the case of a company is not viable, that has no basis and that needs to go to the bankruptcy, or in the case of unscrupulous traders who have no interest in getting the company forward.
In the absence of cooperation on the part of the trader to reach an agreement, the most adversely affected by the collection of updates, fines and accessories, are the creditors. It is arbitrary that debits arising from tax credits to continue causing surcharges after the judgment of declaration of the insolvency when all other debts (except in the case of real-estate loans, up to the amount of the object of the warranty) can no longer earning interest or surcharges. That only causes the tax credits grow increasingly, and the amount of the other debts decrease in proportion, which is inequitable in the circumstances of the merchant.
Given that the LCM does not provide a date for the completion of the bankruptcy, the treasury is going to retain the right to be charged all their credits as the merchant go acquiring goods, what then is the need to stress it, wanting to collect each and every one of the surcharges that they arrived to be generated during the entire period in which lasts for the insolvency?
B. Landlords
Article 106 of the LCM points out that the insolvency of the lessor or the lessee does not resolve the leasing of real estate, however, in the case of the contest of the lessee, the conciliator may opt for the resolution by payment to the lessor of the liquidated damages in the contract or, failing that, by the payment of three months' rent.
This article gives you an undue preference to the lessor, even greater than that of the secured creditor royal, by virtue of the fact that the wording of the article makes it clear that the merchant or conciliator only may terminate the lease against payment of the corresponding penalty in favor of the lessor, and expressly stipulates a penalty of three months' rent even if the lessor does not stipulate. There may be other creditors many more affected by the contest that did not even go to receive the full payment of the credit, because then, imposed by law the obligation of the spotlight of not only pay the lessor the rightful income for each month that continues with the use of the property, which is reasonable, but additionally a conventional penalty that often could not be negotiated with the tenant or when the parties to the lease is fully solvent. The lessor has the power to agree securities or guarantees to cover the fulfillment of the obligations of the lessee, thing that they can do other creditors, such as employees, consumers, suppliers, etc why reward the lessor negligent that did not impose a penalty in your contract? In addition, for the collection of the applicable penalties, should register to the lessor as common creditor for the death penalty along with the rest of the creditors of the merchant, and does not require the merchant to pay at the end of the lease.
C. Secured creditors
The LCM provides to secured creditors a treatment different from the one normally receive in the laws of bankruptcy and other countries.
The LCM treats the goods that are subjected to a warranty as real property "members of the earth" of the trader. Normally, the laws on commercial competitions allow the separation of property subject to a real guarantee of the mass of the trader at the start of the procedure of the contest, and the reason it is common sense, the object of a real guarantee is to guarantee the payment of the obligations of the merchant when in difficulties in complying with the same. While the merchant has sufficient assets to meet its obligations and complies with the same, it is not necessary for the running creditor collateral. However, once that is in default, and that furthermore, it has been declared in insolvency, which implies that their assets are not sufficient to meet all its obligations, is updated the course of execution of the collateral. If at the time the guarantee is useful to the creditor cannot be run, it would not be sensible for the creditors obtain real security. Once breached the secured obligation, the collateral must be executed to pay the obligation guaranteed with the proceeds from its sale. The possibility for the creditor to separate from the earth the good subject to collateral is inherent in the faculty of execution.
The LCM does not foresee the possibility of property subject to a real guarantee is separated from the earth. We could make some forced interpretations of articles 70 and 71 of the LCM; however, the explanatory memorandum is emphatic that the goods subject to a real guarantee cannot be separated from the earth. It is possible that the foregoing is that the payment to the workers by wages and allowances up to a year has preference,10 and therefore we have to wait and see if the assets of the estate will cover such preferential payment to workers, because otherwise, payment must be obtained from the secured assets. Initiated the phase of bankruptcy, creditors recognized with collateral can start or continue execution procedures on the secured assets with notification to the trustee, who may participate in the procedure by defending the interests of the earth.
In accordance with article 214 of the LCM, during the first 30 calendar days of the stage of bankruptcy, the liquidator may prevent the execution of a separate guarantee "when you consider that it will be to the benefit of the alienate mass as part of a set of goods": this is a very broad approach "for the benefit of the earth"; it should be clarified that the trustee can only suspend the execution of real guarantees, if the price that you can obtain from your sale along with other goods of the earth is significantly higher than or because the earth does not reach to cover the preferential rights of workers.
In accordance with article 68 of the LCM, the labor authorities may order the execution on a good subject to a "real guarantee an integral component of the earth", in which case; the conciliator may replace the good by a "bail to ensure compliance with the obligation of labor in 90 days". If the conciliator will not able to replace the good subject to the actual warranty, it must allow for the implementation of the well and register as "credit against the earth" in favor of the secured creditor the amount of credit recognized.
The LCM manages a set of words in the second paragraph of that article that creates confusion. First points out that when the replacement of the well has not been possible, the conciliator will register as "credit for the mass" the amount that will be less significant between the amount of the credit recognized to the secured creditor and the real value of disposal of the asset subject to the collateral. He then pointed out that if the value of "realization of warranty" (which is equivalent to the value of alienation of the well) is less than the amount of credit recognized, the difference will be registered as a "common credit". LCM does not make any distinction between a "credit for the mass" and a "common credit". They are exactly the same thing: the credits that are not privileged to be paid until the end of the bankruptcy, then why make such a distinction? It seems that the intention of the LCM out not only to punish the secured creditor, by depriving it of their warranty, but additionally, common creditor do so only by the amount that is less than between the value of their credit and their warranty. The foregoing is unprecedented, except in the case of the garment without transmission of possession and the guarantee trust, in which case, the payment of the amount owed is limited to the value of the guarantee by law, or in the event that the creditor had expressly agreed, no creditor in the procedure is being denied the recognition of the total amount of your credit, even when the amount does not go to be able to be paid in its entirety. If the value of alienation of the guarantee is less than the value of the credit recognized, there is only the first one, why? Immediately, the LCM rectified by noting that the difference between the value of collateral and credit recognized, if the first was lower, is also recorded as common credit". It was not easy simply be noted at the outset, without creating confusion, that the difference between the value of alienability of the asset and the amount of the credit is recorded as recognized "common credit". The goal of that statement is not clear.
In addition, it is very serious what has this article, by virtue of that you are leaving in common quality of creditor to a creditor who took the trouble, and possibly pay the costs that require the establishment of a real guarantee. What is provided for in this article should only be carried out when the assets of the estate are not sufficient for the payment of the debts owed by wages and allowances of the workers earned during the year prior to the date of the judgment of insolvency,11 due to the fact that these debts are the only ones that have a preference to the payment to secured creditors in accordance with the provisions of the same LCM, otherwise is totally disingenuous of right to the collateral acquired by secured creditors, and once again, it is punishable to secured creditors took the care to protect the payment of their credits, and rewards to those "sophisticated creditors" That was not taken such discomfort, by giving them the same treatment. It is unfair that a secured creditor, in such circumstances, being deprived of his privileged place and being sent to the end of the line. Due to the loss of his collateral was due to circumstances beyond the, should retain its privileged place and be paid with the assets of the masses (including the remnant of the value of your collateral) prior to the other creditors, including the treasury, the creditors with special privilege and other creditors whose payment has preference to the common credit.
The real-estate loans (regardless of the place agreed upon for your payment) will remain in the monetary unit in which they are called, and will continue to generate interest up to the value of the assets that are provided as a guarantee. To determine the involvement of secured creditors in the decisions of the contest, will become the amount of their loans to the declaration date of the contest to IDUS.
Article 89 of the LCM points out that if a creditor feels that the value of their guarantee is less than the amount of their credit, you can ask the judge him to be considered as a secured creditor "by the value he attaches to their warranty", and as common creditor for the rest, but must waive any surplus is obtained from the warranty.
From my point of view, it makes no sense that a secured creditor attaches a value to your warranty and to renounce any surplus that may be obtained from its sale. The same LCM, in its article 214, points out that in the event that the creditor has not exercised its right under article 89 of the LCM, if the value of valuation of the asset subject to the guarantee is less than the value of the credit recognized, shall be paid to the creditor the value of valuation of the asset, and the difference between this value and the amount of credit recognized will be registered as "common credit". Hence, regardless of whether the creditor or not follow the procedure laid down in article 89, the surplus of his claim on the value of their collateral will be recognized as common credit, with the big difference that if the creditor does not follow the procedure of article 89, you don't have to compromise to the excess value of its warranty. Therefore, it has no case that the creditor follow the procedure of article 89. It should be noted that the wording of article 214 makes a comparison between "the amount of the credit concerned" and the value of valuation of the asset subject to the warranty. It would be much more convenient a wording that refers to the "amount of credit recognized" to avoid an interpretation of the meaning of "credit concerned" (it could be argued that refers to the nominal value of credit, as has been documented before the competition). The interpretation of that article should be given the same meaning in both phrases.
6. Termination of the contest
The new philosophy that follows the LCM has not resulted in a final completion of the insolvency. If the objective of the LCM was to create procedures faster and more efficient for all parties involved, and eliminate the concept or negative prejudice (stigma) or "punisher" attributed to a bankrupt or contest, it is somewhat disappointing that the LCM does not put an end to bankruptcy.
Most of the developed countries made to the company bankrupt in dissolution and liquidation once finished the procedure of sale of the mass assets and the payment of the bankruptcy fee. In the case of Mexico, the article 235 of the LCM points out that the creditors who have not received a payment in full shall retain their rights and actions against the trader. Also, article 264 of the LCM points out that if it terminated the contest without that all creditors have received the full payment of their claims, any creditor recognized that within the two years following the termination of the contest or bankruptcy proves the existence of sufficient property for the payment of the procedure, including fees of the conciliator or liquidator, costs for management and conservation of the property, etc. , you will be able to get the reopening of the contest, which will continue at the point where you stopped.
The LCM only contains an article, the 262, to regulate the termination of the contest, which drew as causes of termination, among others, the adoption of a convention of conciliation and, on the other hand, the payment of dues to the bankruptcy creditors recognized by the partial or total amount of their claims, as the case may be. It seems that the grounds for termination apply both to the contest that ends at the conciliation stage as to which ends in the stage of bankruptcy. It would be interesting to know what would happen if the conciliation stage ends the day 360, the trader does not comply with the Convention, and a creditor wants to reopen the competition, how will restart in the stage of bankruptcy? The LCM points out that the conciliation stage may last no longer than 365 days; however, if it was resolved that the company was viable and that with its ordinary operation would be able to comply with its obligations why is going to open the stage of bankruptcy? In this case, it is most appropriate that the contest will be open again in the conciliation stage and impose a new deadline for resolving the problem and reach another agreement, on the understanding that if the breach of the convention was the result of a misconduct on the part of the trader, the trader must be replaced immediately in the administration of the company and must be applied to the penalties provided by the LCM and any other applicable provision.
A. Conciliation agreement
The adoption of an agreement to finish the contest has beneficial consequences for the parties involved. In the agreement they may be agreeing to a form of payment that suits both the merchant and its creditors, taking into account the time required by the company to recover, the measures to be taken to go ahead and the facilities that they can give the creditors. Conventions can agree grace periods and may give preference to some creditors, depending on the particular situation. It is precisely for the above, it is extremely important that all creditors come with the trader to renegotiate the payment of their claims during the conciliation stage. Should not be treated in the same way to a creditor who showed no interest nor participated in the conciliation process, which to a creditor who heard the merchant, and devoted time to seek solutions for payment of their claims. The LCM provides that equality of treatment to provide in their articles 158 and 159 for those creditors that do not sign the convention can only be stipulate you deduct and expect equal to the "minor" that have been given to the creditors who have signed the Convention, as well as the payment of the full amount of their debts, not only to the date of declaration of the contest, but including the accessories that will be generated until the date of adoption of the Convention. These provisions only encourage creditors to not participate in the convention.
This is unfortunate, because the possibility that the trader out of its state of insolvency law should not be left or in the hands of the trader nor in the hands of some of its creditors. To all the parties that the merchant benefits exceed its state of insolvency, not only to recover their claims, but to continue to trade with him. I repeat, the insolvency of a company has consequences of public interest, affects employees, consumers, customers, suppliers and other creditors of the merchant. The solution should not be left in the hands of a few, and the above provisions of the LCM reward the creditors that do not want to be involved or surrender to the situation of the merchant.
I also think it is unfortunate that the LCM is as detailed as to what may be stipulated in the convention. In summary, article 158 says the payments to creditors who do not have signed the Convention, but in respect of which the same is considered signed for purposes of quorum required for its approval, must be done within 30 days of the adoption of the Convention. These provisions in addition to favoring non-participation of creditors in the convention, making it more difficult approval and compliance. The parties must negotiate the agreement freely according to your convenience before the threat of bankruptcy, which does not benefit anyone.
On the other hand, it is not clear which is the object of secured creditors’ real sign the convention. The explanatory memorandum to the LCM points out that "experience has shown that the participation of secured creditors may well prove to be extremely valuable for a settlement with the trader". It may be logical that with the previous regime of the Bankruptcy Law, and suspension of payments the participation of creditors with real outside warranty convenient, for his experience, in the structuring and negotiating arrears. However, the new LCM puts the bidding procedures in charge of an institute of specialists in all the classes related to the subject of competition, which includes dedicated financial and paid exclusively for your intervention in such procedures. Hence I do not see why it leads to a practice that is not necessary in the application of LCM. Secured creditors are going to pay their loans with the proceeds from the sale of the property to ensure their credits. If the proceeds of the sale will not be imposed to cover its claims, then it will be common creditors for the remnant and as such will participate in the convention, but why does that have to intervene secured creditors the amount of their secured credit? The payment of such claims is not a matter of convention, unless the creditor decides to renounce their warranty and be a common creditor. And why are going to intervene in the adoption of conventions that are made between the merchant and the common creditors, when these conventions do not have to affect the payment of their claims? Even if it were to be argued that can advise common creditors, is no longer necessary because there are specialists that they are doing. The participation of secured creditors in the negotiation of a convention that does not affect them may lead to a conflict of interest. In addition to this type of counseling is not a primary function of the "sophisticated creditors". We should not impose additional obligations on the sophisticated "creditors" so that they can better comply with their obligations.
The only reason why it is justifiable that secured creditors involved in the adoption of the Convention, is to defend their rights in relation to the payment of the debts that have a preference for their credits, i.e. , payments of wages and compensation to workers earned during the last year, to the extent that the mass assets are not sufficient to cover these debts, and the payments of the competition procedure.
The LCM clarifies that secured creditors have only pay for the costs of administration, conservation, alienation and litigation costs related to the property subject to the warranty, but does not make clear whether the proportional share of their credits in the fees of the visitor, conciliator and trustee, in his case, also should be deducted from the proceeds of the sale of the property subject to warranty under which these people also spend part of their time to deal with such assets. Also, if the mass is not sufficient to cover the payments owed to the workers of the company in accordance with the provisions of the LCM, the amounts that they are required to cover those debts also shall be deducted from the proceeds of sale of the goods subject to the warranty.
B. Some of the effects of bankruptcy
Returning to the initial argument, the adoption of a convention has favorable consequences for all parties; however, bankruptcy. The bankruptcy brings to the merchant the failure of your business, the loss of your investment and, in the case of individuals, several restrictions in its future activities. The majority of our laws drawn between the requirements needed to play any position: "It is not a question of a bankrupt person or debtor that has not been rehabilitated". When you can say that the contest has been rehabilitated? If the creditors retain an action against the trader until their claims have been paid in full.
It would be interesting to carry out an analysis of such provisions, and the possibility to include administrators of moral people who fall into the bankruptcy in these provisions. From the stand point, it would seem that these provisions are limited to bankrupt natural people or declared bankrupt, however, why administrators of a moral bankrupt person are being saved? Based on the previous statement, and if the aim is to ensure that such people to assume positions of administrative or management, high-responsibility or trust, why not impose the same rule to people who also managed a company, who have fallen in the same course of bankruptcy, but from a legal point of view, is constituted as a moral person?
This is carried out in many other countries, which is reasonable. Of course, the idea, as explained at the beginning of this work, is not to punish blindly to the trader for the simple fact of being in competition, the bankruptcy or the contest may be given by different causes. What is suggested is punishing anyone who performs a willful misconduct and commits an offense and disable who has been fully proved that it does not have the training or skills sufficient to manage and run a business. In a bankruptcy none of the parties win. The preceding paragraphs describe the implications for the merchant before a bankruptcy. For the creditors, usually the result of a bankruptcy is that they cannot collect the entirety of their debts.
Once the merchant files for bankruptcy, must be paid all its debts with the existing goods on the date of bankruptcy or that are obtained during the procedure. However, in developed countries the bankruptcy has to come to an end, it is not worth that the bankruptcy is eternal. Neither the current LCM or the previous law have sought a middle in this point. Under both laws, provided that the trader buy some good can be reopened the procedure for the payment to the creditors, and the faculty of the creditors do not have order. The LCM does not provide for the dissolution and liquidation of the traders, moral people, after the end of the bankruptcy, and as the creditors continue to maintain action against the merchant it would seem that you cannot carry out its dissolution and liquidation. So that the trader always going to be bankrupt, and in addition is going to be unable to start another business by the restrictions imposed on it, and unable to repay their loans considering that their tax credits will continue earning surcharges if it could not reach an agreement or simply because the company was not viable.
From here that even when the objective of these provisions is that the creditors will charge all of their claims, in practice is going to be difficult to achieve by taking into account the lack of incentive of the merchant to proceed with the operation of the company with all the restrictions that are imposed by the bankruptcy, and knowing that one hundred percent of the income that you get will be to their creditors, or even worse, in the case of the non-viable enterprises.
The majority of the laws of the developed countries, if not all, provide a deadline for completion of the bankruptcy, and what is even more interesting and mind-boggling for us, is that they do it not only in the case of moral persons through its dissolution or liquidation, but the principle applies also to the bankruptcy of individuals. Countries such as United States of America, Canada, the United Kingdom, Germany, Holland and Australia, to mention a few, provide for a period of between six months to seven years to rid the merchant physical person of the bankruptcy. Hence if the trader had complied with the provisions by the liquidator and the judge for the bankruptcy, once this period has passed, ends its bankruptcy even when there are no finished paying off all its debts. In the United States of America, it is even possible that the bankrupt merchant retain almost all of its assets, always and when forced to allocate a significant part of their income to their creditors during the subsequent years.
From here that must be sought a middle ground, one that balances the interests of the merchant and the creditors, which also require creditors to reach the best convention, and this just means it is the imposition of a time limit on the bankruptcy. The trader, physical person, partner, shareholder or manager, you should be able to bounce back from bankruptcy and go forward. The new philosophy that channels the LCM is not reflected in the possibility that the dealer is to recover, what can be done to eliminate the negative and fatalistic conception of the bankruptcy itself remains in the LCM as a tunnel without exit?