## Facts

- Vitro S.A.B. de C.V., a Mexican holding company, issued multiple series of unsecured notes governed by New York law that were guaranteed by Vitro operating subsidiaries.
- After financial distress and default, Vitro engaged in internal transactions that increased intercompany claims held by subsidiaries and affiliates.
- Vitro commenced a Mexican concurso mercantil reorganization, and a Mexican court confirmed a plan that extinguished the old notes, provided new consideration, and purported to release the non-debtor subsidiaries’ guarantees to noteholders.
- Plan approval depended heavily on votes cast by Vitro-related entities holding intercompany claims treated as voting claims under Mexican law; non-insider noteholders would have rejected the plan if counted separately.
- Noteholders pursued New York litigation and involuntary U.S. bankruptcy filings against certain guarantor subsidiaries.
- Vitro’s appointed foreign representatives filed a Chapter 15 petition in the Northern District of Texas seeking recognition of the Mexican proceeding and later sought U.S. enforcement of the Mexican plan and an injunction against U.S. actions on the guarantees.

## Issues

1. Whether the Mexican debtor could validly authorize and appoint “foreign representatives” for Chapter 15 purposes where the foreign proceeding did not use a formal “debtor in possession” label.
2. Whether Chapter 15 permits a U.S. court to enforce a foreign reorganization plan that provides nonconsensual releases of non-debtor subsidiary guarantors and bars U.S. enforcement litigation.
3. Whether the requested enforcement and injunction were barred as “manifestly contrary” to U.S. public policy under 11 U.S.C. § 1506 and inconsistent with the standards for additional relief under 11 U.S.C. §§ 1507 and 1521.

## Decision

- The Fifth Circuit affirmed recognition of the Mexican concurso as a foreign main proceeding and upheld the appointment/authority of Vitro’s foreign representatives.
- The Fifth Circuit affirmed denial of U.S. enforcement of the Mexican plan to the extent it discharged non-debtor subsidiaries’ New York-law guarantees and sought to enjoin U.S. enforcement actions.
- The court held that Chapter 15 could not be used to obtain, through ancillary relief, nonconsensual non-debtor releases that would not be available in a plenary Chapter 11 case in the Fifth Circuit.

## Legal Principles

- Chapter 15 recognition may be granted where the debtor retains management control in the foreign proceeding and can authorize appointment of foreign representatives consistent with the foreign regime.
- Comity in Chapter 15 is substantial but limited; “additional assistance” under §§ 1507 and 1521 must be consistent with creditor protection, just treatment of claim holders, and distributions substantially in accordance with U.S. bankruptcy norms.
- In the Fifth Circuit, § 524(e) is read to bar most nonconsensual releases of non-debtor liability; Chapter 15 does not authorize granting indirectly relief that domestic bankruptcy law would not allow directly.
- Section 1506 is a narrow exception, but it permits refusal to grant Chapter 15 relief that would severely impair U.S. creditors’ legitimate expectations and conflict with core U.S. bankruptcy protections.
- A foreign plan’s use of insider voting power and intercompany claims may bear on whether requested U.S. relief satisfies §§ 1507(b) and 1521 standards for protecting U.S. creditors.

## Conclusion

The Fifth Circuit recognized Vitro’s Mexican reorganization as a foreign main proceeding but refused to enforce the plan’s nonconsensual releases of non-debtor subsidiary guarantees and related injunction, holding that Chapter 15 comity and ancillary relief cannot override U.S. creditor protections and Fifth Circuit limits on non-debtor releases.


In re Vitro S.A.B. de C.V., 701 F.3d 1031 (5th Cir. 2012)