Vitro SAB’s use of $1.9 billion in inter-company debt to control its court-supervised restructuring should be examined by Mexico’s government, two U.S. lawmakers told the country’s ambassador.
The Mexican glassmaker’s bankruptcy strategy would “chill cross-border investment” and shouldn’t be allowed to set a legal precedent, Representatives Patrick Meehan of Pennsylvania and Jared Polis of Colorado wrote in an Oct. 20 letter to the envoy, Arturo Sarukhan Casamitjana.
“Vitro’s unorthodox reorganization violated international bankruptcy norms by preserving equity for its own shareholders at the expense of its public creditors, many of whom are U.S.- based,” according to the letter from Meehan, a Republican, and Polis, a Democrat.
Vitro defaulted on $1.5 billion in debt, including $1.2 billion of bonds, in 2009 after a recession slashed auto- and construction-glass demand. A Mexican judge ruled in August that Vitro, based in the Monterrey suburb of San Pedro Garza Garcia, had the right to use $1.9 billion of inter-company loans that gave it a majority of creditor votes in its restructuring.
Roberto Riva Palacio, a Vitro spokesman, said in August that creditors, including the inter-company debt that Vitro controls, will vote on the company’s debt proposal by Nov. 14.