In the Matter of Vitro S.A.B. de C.V.

Facts

Vitro S.A.B. de C.V., Mexico’s largest glass manufacturer, borrowed approximately $1.2 billion between 2003 and 2007, primarily from U.S. investors. This debt was evidenced by three series of unsecured notes, which were guaranteed by substantially all of Vitro’s subsidiaries. Following the 2008 global financial crisis, Vitro’s financial condition deteriorated, and in 2009, it stopped making scheduled interest payments on the notes.

Before filing for bankruptcy, Vitro engaged in a series of transactions with its subsidiaries that transformed the subsidiaries from debtors owing Vitro $1.2 billion into creditors to whom Vitro owed $1.5 billion in intercompany debt. In December 2010, Vitro filed a concurso proceeding (Mexican bankruptcy reorganization) in Mexico. The Mexican court eventually approved Vitro’s reorganization plan, which extinguished the Old Notes and discharged the guaranty obligations of Vitro’s non-debtor subsidiaries. The plan was approved with the votes of Vitro’s insider creditors (the subsidiaries), without which the plan would not have received sufficient creditor approval.

Vitro’s foreign representatives sought recognition of the Mexican proceeding under Chapter 15 and enforcement of the reorganization plan in the United States. While the bankruptcy court recognized the proceeding as a foreign main proceeding, it refused to enforce the portion of the plan that extinguished the guaranty obligations of the non-debtor subsidiaries.