Mexico: The Pandemic Aftermath

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In summary

Mexico continues to face unprecedented times and historical challenges since the current administration took office in December 2018. While the pandemic seems to have receded and the recovery has started, the outlook remains challenging for businesses coexisting with policies undertaken under a left-leaning agenda that has done close to nothing when it comes to supporting businesses. Rather, several sectors where private investors play a significant role seem to be under permanent scrutiny and examination. The torrent of insolvency proceedings foreseen two years ago seems to be holding on to a gradual and slow recovery, yet new cases continue to arise. Even though concurso[1] proceedings remain useful, they have not recurred as expected.

Discussion points

  • The covid-19 pandemic recovery
  • What are companies doing?
  • The concurso, still a useful tool
  • Concurso proceedings
  • Recent developments: new specialised courts
  • Challenges ahead

Referenced in this article

  • Covid-19 receding pandemic and recovery
  • The Andrés Manuel López Obrador (AMLO) presidency
  • Aeroméxico
  • Interjet
  • Grupo Famsa
  • Accendo Banco
  • AlphaCredit
  • Crédito Real
  • Unifin
  • Altán Redes

The receding pandemic and the recovery

The contraction of the Mexican economy took place before the covid-19 pandemic as the markets were anticipating a debutant administration blatantly defying open market policies after three decades of liberalising the economy. Both the pandemic and the policies and actions implemented by the government proved to be thoroughly disturbing. Challenges for companies operating in Mexico include the deepest political transformation in a century and a complicated relationship between the government and the private sector. Stunning actions started with the cancellation of the ongoing construction of the new Mexico City Airport (having reached an over 30 per cent milestone and public spending of billions of dollars on the project), followed by a continuous effort to dismantle the open energy market, where billions of dollars had been invested.

The pandemic did nothing but exacerbate an already deteriorating environment. In this perfect storm, the Mexican economy contracted by 8.2 per cent in 2020, a figure well in excess of the 1982 debt crisis, the 1994 peso crisis and the 2007–2008 global financial crisis in breadth, duration and severity.[2] A pale economic recovery started after main mobility restrictions were progressively lifted, which led the economy to recover through 2021 at a growth rate of 4.8 per cent. However, the path for a sustained and successful full recovery remains uncertain and challenging.

Reports issued by the World Bank in March 2021[3] and April 2022,[4] showed an initial recovery in 2021 above 4.5 per cent levels, but anticipated that the gradual recovery could be slower, forecasting that the Mexican economy will only continue to expand by modest figures in the neighbourhood of 2 per cent throughout 2022, 2023 and 2024. These reports further stressed the need for the AMLO administration to:

  • deal differently with one of the most pressing pre-crisis challenges (key for recovery): facilitating job creation by easing access to finance and labour markets, easing regulatory burdens and improving public services;
  • adjust its approach to the involvement of the private sector in key industries, including the energy sector;
  • enable a tax reform to afford fiscal space; and
  • facilitate a turnaround of Pemex’s financial situation.

What are companies doing?

A combination of the pandemic, the lack of public support and disruptive policies challenging private players has resulted in investments remaining in the pipeline, waiting for better times while ongoing projects defend their existing rights in court. Corporate balance sheets reflect this.

Although a number of sectors are already recovering, if they have not already recovered in full, other sectors continue to struggle towards recovery.

Take, for instance, the air transportation industry: in Mexico, as elsewhere, the decrease in air travel in the first months of the pandemic in 2020 significantly affected airlines. Unlike many other countries, the federal government in Mexico did not and has not extended the kind of short-term assistance that would help keep airlines afloat. Despite calls by the International Air Transport Association during the summer of 2020 for government–industry dialogue in Mexico to aid airlines, the government did not and has not offered any assistance.[5]

To make things worse, Mexico’s rating under the International Aviation Safety Assessment (IASA) by the US Federal Aviation Administration (FAA) dropped from category 1 to category 2 in May 2021. As at the time of writing, it remains in category 2, with no assurance that the Mexican aviation authority will be able to comply with International Civil Aviation Organization or FAA standards or that the FAA will raise Mexico’s IASA classification back to category 1.

Although a couple of Mexican carriers have been able to exceed the size of operations achieved before the pandemic throughout 2021 and up to June 2022, the industry overall has not yet reached pre-pandemic levels.[6]

Amid this crisis, in July 2020, Mexico’s legacy flag carrier, Aeroméxico, filed for voluntary restructuring under Chapter 11 of the US Bankruptcy Code, only being able to successfully exit such proceeding in March 2022, after a near two-year-long negotiation process. Another critical player in the market, Interjet, a Mexican low-cost carrier, returned a significant number of aircraft after a major drop in passengers transported during the first half of 2020. It completely ceased operations in December 2020, and after a long struggle with scandals dealing with creditor lawsuits, employee and union conflicts, tax fraud and shareholder litigation, its judicial insolvency proceeding was finally admitted in late August 2022.

The banking and financial sectors are not indifferent to the situation. In June 2020, the National Banking and Securities Commission (CNBV) revoked the banking authorisation of Banco Ahorro Famsa, following its failure to meet the minimum capitalisation index and alongside its holding company, Grupo Famsa, filing under Chapter 11 of the US Bankruptcy Code. In September 2021, the CNBV also revoked the banking authorisation of Accendo Banco after it failed to meet the minimum capitalisation index. Even though well-capitalised and in line with Basel III requirements and safeguards, the banks’ soundness on assets on the balance sheets is yet to be tested. The story seems to be different for non-bank financial companies, a few of which are already struggling with the long-term effects of the pandemic recession and worldwide high inflation rates. In March 2022, the consumer and SME financing company AlphaCredit[7] was declared subject to judicial insolvency proceedings; this was followed by Crédito Real, the largest non-bank financial company in Mexico, filing for judicial liquidation in July 2022; and, in August 2022, by Unifin, a large leasing non-bank financier, filing for bankruptcy after disclosing with the Mexican Stock Exchange several payment defaults and its financial restructuring.

The energy market, including the oil, gas and power (especially renewables) sectors, is also under the spotlight following a lack of support for new developments, as AMLO’s government is pushing in a number of fronts through both the executive and the legislative branches to take away the path travelled under the previous administration, often with measures of dubious legality. With a view to bringing the country’s energy companies back to their former glory, policies have not only turned away investment and prompted internal legal struggles, but also seriously endangered existing projects. An important number of existing projects may be forced to cease operations and struggle with insolvency issues unless judicial legal protection can be obtained against this wave of governmental attacks. In all likelihood, the market will not turn around until sometime after AMLO’s term ends in 2024.

Within this turmoil with AMLO’s government, Altán Redes, concession-holder for the operation of Mexico’s 4.5G LTE and 5G broadband network, also filed for a judicial insolvency proceeding in late 2021.

The review of the balance sheet and cash flow projections of a company are an essential first step, along with the anticipation of potential disruptions in contractual obligations and the preparation of a business plan tailored to recognise a new business reality. Where feasible, external financial and legal advice can be very helpful. Whether or not insolvency proceedings are to be faced, the more conscious the company is about its situation and the challenges ahead, the greater its chances to achieve a better outcome.

Insolvency proceedings are also an alternative to be carefully analysed in light of the actual conditions of a company and the particular requirements to preserve its value.

Insolvency proceedings in Mexico

The concurso, still a useful tool

Historically, bankruptcy proceedings were rare in Mexico. Many attributed this to cultural resistance and legal impediments to voluntary declarations under former law.[8]

The Commercial Insolvency Law, in effect since May of 2000 and amended in 2007 and 2014,[9] changed the way businesses and legal practitioners see insolvencies involving persons or property in Mexico. Enacted to help keep struggling businesses[10] in operation and to reactivate credit transactions in Mexico, the Commercial Insolvency Law aimed to minimise the negative effects of non-payment of debts on defaulting businesses, creditors and the Mexican economy as a whole.

By providing for a single insolvency proceeding (concurso mercantil) separated into two not necessarily successive stages, conciliation (reorganisation) and bankruptcy (liquidation), the law aims to protect both debtors’ and creditors’ rights. A debtor and its creditors are initially compelled to try to reach a settlement agreement on mutually acceptable payment and restructuring terms during the conciliation stage, before a defaulting business and its assets may be sold off to pay its debts during the bankruptcy stage.

While a number of features mentioned above remain controversial among practitioners, the concurso proceeding remains a useful tool to overcome struggling and extraordinary financial conditions in a relatively efficient manner following modern legal and financial trends in international practice.

The World Bank has recognised this by assessing the following key indicators[11] on insolvency proceedings in Mexico and affording a relatively high score and ranking on Mexico’s legal regime for resolving insolvency higher than that of comparable economies in the Latin American region.[12]

Recovery rate (cents on the dollar)63.9
Time (years)1.8
Cost (% of estate)18
Outcome (0 piecemeal sale to 1 ongoing concern)1
Strength of legal framework index (0–16)11.5
Score (0–100)70.3
Ranking (out of approximately 190)33

However, insolvency proceedings remain far less common in Mexico than in other jurisdictions. Around 380,000 bankruptcy cases were filed in the United States in 2022 alone, for a total number of pending cases nearing 700,000 by June 2022.[13] By early October 2021, only 889 concurso filings had been made under the Commercial Insolvency Law since it was enacted in May of 2000.[14] Concurso has clearly been underused by debtors in Mexico, some of which have even elected to initiate proceedings elsewhere (mainly before US courts following proceedings under the Bankruptcy Code).

As noted above, recent cases of Mexican companies filing for protection under Chapter 11 in the United States include Aeroméxico and Grupo Famsa. The reasons behind electing to have a US court as the main insolvency forum vary, but essentially have to do with the type of debt held, as well as other factors such as the availability and efficient recognition of debtor-in-possession (DIP) financing, a generalised stay of obligations and well-tested simple and expedited proceedings in specialised courts.

Concurso proceeding

The Commercial Insolvency Law applies to insolvencies of individuals or entities that fall under the definition of a debtor merchant. This definition includes the debtor’s assets held in trust when business activities are affected and entities holding more than 50 per cent of another company’s shares that give the holder voting rights. The definition also includes branches of foreign companies, although only regarding assets located in Mexico.

Insolvency declaration

Only a debtor, one of its creditors, a governmental agency in charge of auctioning and selling seized assets (Instituto para Devolver al Pueblo lo Robado) or a federal public prosecutor may file a petition for an insolvency declaration judgment. To obtain the insolvency declaration, it must be shown that a debtor is in general default of payment of debts, which occurs when the debtor has debts to two or more different creditors and the debts are 30 calendar days or more overdue and represent 35 per cent or more of all the debtor’s debts, or the debtor does not have sufficient assets to pay at least 80 per cent of its outstanding debts.

Newly created federal district courts with exclusive jurisdiction on concurso proceedings are competent to declare a debtor insolvent and conduct the commercial insolvency proceeding. After admitting a petition to declare insolvency, the court asks the Federal Institute of Commercial Insolvency Proceedings Specialists (IFECOM) (a judicial agency) to appoint an examiner to inspect the debtor’s financial records for a period of 15 days, which can be extended for 15 additional days. If, after conducting the inspection, the examiner reports to the court that the debtor is in general default of payment of debts, the court evaluates the reports and the other evidence that appears in the file in order to declare the debtor insolvent by rendering an insolvency declaration judgment and, thereby, initiating the insolvency proceeding.

The debtor and the creditors representing more than 50 per cent of all debts of the debtor can agree on a pre-filing (or prepackaged) settlement agreement. Once presented to the court, if the court finds that the settlement agreement satisfies the above and all other legal requirements, the court will render an insolvency declaration judgment, initiating the insolvency proceeding directly within the reorganisation stage, thus avoiding the appointment of an examiner and the inspection of the debtor’s financial records. The proceeding will run its course and the settlement agreement will have to be finally and definitely approved by the court.


After the court declares a debtor insolvent, the debtor and creditors must submit to reorganisation. This first stage is held under the supervision of a conciliator appointed by IFECOM, and its purpose is to preserve the debtor’s business through a settlement agreement between the debtor and the recognised creditors. This stage lasts for a period of 185 calendar days beginning on the date the insolvency declaration judgment is published, unless the court grants an extension.

If, during the reorganisation stage, the conciliator and more than half of the recognised creditors believe a settlement is about to be reached, they may ask the court to extend the reorganisation term for up to 90 calendar days. If the debtor and at least 75 per cent of the recognised creditors request it, the court may grant an additional extension for up to 90 calendar days. In no event may the reorganisation period extend beyond the 365 days following the publication date. If an agreement is not reached within the original or extended term, the court will declare the debtor bankrupt.

During reorganisation, no one may attach or sell a debtor’s assets, even if judicially ordered. An exception is allowed for the attachment or sale of assets to pay labour-related debts.


For reorganisation purposes, IFECOM appoints a conciliator upon the court’s request, who supervises the debtor’s business management, reviews financial records and receives creditors’ claims. The debtor, however, continues to manage and operate its business during reorganisation as debtor in possession. A conciliator also decides whether to terminate agreements that are pending execution or performance and whether to take out new loans (DIP financing). New loans authorised by the conciliator to fund the debtor’s ordinary operation as the proceeding runs its course hold a super-priority claim against the debtor’s estate.

Debt recognition and management

Creditors may file to have their debts recognised during any of the periods the law allows. Even if some creditors do not file to have their debts recognised, the conciliator must request recognition of all debts, provided they have sufficient information for this purpose based on the merchant’s accounting.

To determine the amount of the debtor’s debts, all pending debts are considered due and, to the extent that the debtor’s debts are not secured, they no longer accrue interest. Any outstanding principal and interest in Mexican pesos are converted into inflation-linked units of account (UDIs). Regardless of the agreed place of payment, any principal and interest in foreign currency are converted first into Mexican pesos and then into UDIs. A secured debt is maintained in the original currency agreed upon and only accrues regular interest up to the value of the property that secures it.


Settlement agreements are only effective if the debtor and the recognised creditors representing more than 50 per cent of the total recognised common (unsecured) and secured or special privileged creditors sign it.

Once signed, a settlement agreement is presented to the court. If the court finds that the settlement agreement satisfies all legal requirements and is not contrary to public policy, and if the creditors do not file objections or veto the agreement, the court will render judgment approving the settlement. This judgment ends the insolvency proceedings and the approved agreement binds the debtor, all recognised common (unsecured) creditors and all recognised secured or special privileged creditors that either signed the agreement or whose debts are covered under the agreement.

Bankruptcy and liquidation

While the reorganisation stage aims to preserve the debtor’s business by achieving a settlement agreement among the recognised creditors, the purpose of the bankruptcy stage is to sell off the debtor’s assets in order to repay the recognised creditors.

The court may order an insolvent debtor bankrupt if:

  • the debtor files a request;
  • the reorganisation stage expires and a settlement agreement has not been filed for court approval; or
  • the conciliator files a request, citing a lack of cooperation between the debtor and creditors to reach a settlement.


After it renders a bankruptcy judgment, the court orders IFECOM to appoint a receiver for the debtor’s assets.

The debtor must turn over to the receiver possession and management of all the assets and rights of the estate in liquidation. Receivers owe a fiduciary duty to the debtor’s estate and must inventory and sell the assets that integrate the debtor’s estate.

Effect of bankruptcy declaration

Generally, the judgment declaring the debtor bankrupt implies removing the debtor from the management of their business. The receiver must file reports with the court after it takes possession of the estate.

Debtor’s duties

Among the debtor’s principal duties is that of supporting the receiver, either personally or through a legal representative, on matters related to the bankruptcy and refraining from undertaking certain acts without the receiver’s general or specific written authorisation.

Selling off estate assets

The receiver is entitled to begin selling the debtor’s assets and the rights that make up the estate. If selling the business as a productive unit may yield the highest sales proceeds, the receiver must consider the option of keeping the business as a going concern.

Order of preference and payment

For the purpose of payment of debts as agreed upon in the settlement agreement or liquidation during the bankruptcy stage, a debtor’s debts are paid based on the nature of the credit and in accordance with the following specified order of preference:

  • labour debts related to employee wages and severance for the two years preceding the insolvency declaration and certain super-priority debts (including, among others, those related to the examiner’s, conciliator’s and receiver’s fees, and to the repair, maintenance and management of the bankruptcy estate);
  • singularly privileged credits (applicable only if the debtor is an individual);
  • secured credits;
  • debts assumed to manage the business by the debtor with the conciliator’s authorisation (DIP financing);
  • labour-related debts (other than those identified above) and unsecured tax debts;
  • debts to creditors with a special privilege (pursuant to business statutes or by right of retention);
  • debts to common (unsecured) creditors; and
  • subordinated credits (including inter-company credits).

Conclusion of the proceedings

The court may conclude insolvency proceedings on its own motion or upon a valid request:

  • when a settlement agreement is reached;
  • when all recognised creditors are paid in full;
  • when recognised creditors are paid in accordance with insolvency proceeding quotas and there are no more assets to sell;
  • when the estate assets are insufficient to pay the necessary expenses in connection with labour obligations and insolvency proceedings; or
  • at any time that the recognised creditors and the debtor file a request.

Special proceedings and cross-border insolvency

Special rules apply for insolvency proceedings involving a debtor that is a public service provider under government concession, a bank or an auxiliary credit institution.

The Commercial Insolvency Law also contemplates cross-border insolvency for handling cases (domestic and foreign) in which the debtor has assets in more than one country. Following the UNCITRAL Model Law on Cross-Border Insolvency, Mexican law on international cooperation allows a person administering a foreign insolvency proceeding access to Mexican courts. It contemplates coordination in concurrent insolvency proceedings, allows Mexican courts to declare a foreign debtor’s business in Mexico insolvent and the debtor’s creditors to obtain interim orders to protect their rights against a foreign debtor.

Recent developments

In February 2022, the Mexican Federal Judiciary Council issued a mandatory resolution approving the creation of the First and Second District Courts Specialised in Insolvency Matters, both of which formally initiated activities in March 2022. This was a much welcome development after several efforts made over recent years by trial attorneys and the Mexican judiciary.

These new specialised courts, although located in Mexico City, have exclusive jurisdiction throughout Mexico with respect to new concurso filings, and a number of recently filed pending concurso requests were referred to the courts by other district courts. Since their creation, 30 new concurso filings have been admitted. The new courts are populated by judges, officers and clerks with professional inclination and training in insolvency proceedings, including several officers trained in accounting and financial matters. Intensive training for the new courts’ staff has been a very important topic for the judiciary and the training programmes deployed thus far have been particularly interesting where other judges, restructuring professionals and leading trail attorneys (including Carlos Olvera) have been involved and allowed to participate.

Challenges ahead

Companies are uneducated when it comes to facing insolvency situations, let alone voluntary judicial or forced insolvency proceedings. Management is typically educated and expected to perform in a business-as-usual environment. Insolvencies are complex, costly, intensive and time- and energy-consuming processes. A culture of proactively using insolvency resources is being forcefully developed in Mexico, but it will still take time for companies to openly consider and embrace the advantages of a successful insolvency process. Relationships with constituents and stakeholders in an insolvency situation are not in the job description of board members and executives of Mexican companies. A new culture is required to adopt ad hoc governance structures, isolated from management (who are expected to continue operating the business), to deal with the situation if and when insolvency arrives – one that is clear that the exit exists before entering into the process, and the path to be walked to get there.

Simpler and expedited proceedings in the hands of specialised courts would definitely trigger a wider use of concurso in Mexico. However, new rules alone will not achieve a renewed insolvency practice. Legal counsel holds a unique and privileged position towards a more educated business environment when it comes to making decisions in a stressful situation.


[1]Concurso’ is the name for insolvency and bankruptcy proceedings in Mexico.

[2] Heath, Jonathan, ‘Identificación de los ciclos económicos en México: ٣٠ años de evidencia’, Realidad, Datos y Espacio. Revista Internacional de Estadística y Geografía Vol. 2, No. 2, May–August 2011, available at (accessed 25 September 2022).

[3] The World Bank, ‘Renewing with Growth’ 2021 Semiannual Report of the Latin America and the Caribbean Region, available at (accessed 25 September 2022).

[4] The World Bank, ‘Consolidating the Recovery: Seizing Green Growth Opportunities. Semiannual Report for Latin America and the Caribbean’, available at (accessed 25 September 2022).

[5] International Air Transport Association, Airlines in Latin America and Caribbean in Peril, Urgent Government Support Needed, available at (accessed 25 September 2022).

[6] Secretaría de Comunicaciones y Transportes, ‘Estadística Mensual del Sector Infraestructura, Comunicaciones y Transportes’, June 2022, available at (accessed 25 September 2022).

[7] AlphaCredit is a Mexican subsidiary of US company Alpha Latam Management, which also filed for bankruptcy under Chapter 11 of the US Bankruptcy Code.

[8] The Bankruptcy and Suspension of Payments Law enacted in 1943. By the 1980s and 1990s, Mexican business had outgrown the law. The few businesses that did invoke the statutory protections were known to do so as a ruse, to avoid paying their debts by delaying enforcement and foreclosure proceedings indefinitely.

[9] Additional minor amendments were passed in 2019 and 2020 exclusively to provide and accommodate for the enactment of the National Property Forfeiture Law.

[10] The federal statute does not regulate civil insolvency, which is regulated locally under civil code law and is subject to constitutional protection.

[11] World Bank Group, ‘Doing Business 2020’, Mexico, available at (accessed 25 September 2022).

[12] Discontinued data and information formerly published by the World Bank in this regard evidenced that the score and ranking on Mexico’s legal regime for resolving insolvency was higher than that of comparable economies in the Latin American region.

[13] US Bankruptcy Courts – current statistics report on Bankruptcy Cases Commenced, Terminated and Pending during the 12-month periods ending 30 June 2021 and 2022, available at (accessed 25 September 2022).

[14] Instituto Federal de Especialistas de Concursos Mercantiles, current statistics report on proceedings per stage, available at (accessed 25 September 2022).

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