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Vitro announces filing of concurso plan in Mexican court

Post Time:Dec 14,2010Classify:Industry NewsView:81

Officials at Vitro S.A.B. de C.V., Mexico,announced that it fileda voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo León, Dec. 13, thereby commencing its voluntary proceedings, according to a Dec. 14 release. In the U.S., concurso is associated with chapter 11.

Following the filing in Mexico, Vitro intends to commence an ancillary case under chapter 15 of the U.S. Bankruptcy Code, requesting that the U.S. Bankruptcy Court recognize and give deference to its proceedings in Mexico. Vitro also will ask the U.S. Bankruptcy Court to protect it and its non-U.S. subsidiaries from creditor actions in the U.S. while the Mexican proceedings are pending. Once the Concurso Plan is approved by the Mexican court at the conclusion of the Mexican proceedings, Vitro further intends to ask the U.S. Bankruptcy Court to enforce the terms of its restructuring in the U.S., including the cancellation of all Old Notes and the issuance of the New Notes in exchange.

As previously announced, three funds managed by Aurelius Capital Management (collectively, "Aurelius") filed suit against Vitro and several of its subsidiaries in New York State court on Dec. 3, premised on Vitro’s default and non-payment of the Old Notes, and obtained from the court a pre-judgment order of attachment on any assets of Vitro located in New York (the "Aurelius Order"). On Dec. 9,certain funds managed by Elliott Management Corp. also obtained a pre-judgment order of attachment (the "Elliott Order") similar to the Aurelius Order (together with the Elliott Order, the "Orders"). As previously announced, on Dec. 9, the Aurelius Order was served on D.F. King, which acts as the depositary for the Tender Offer, and D.F. King has determined not to direct the settlement of the Tender Offer or instruct the Depository Trust Company to complete the settlement, until D.F. King receives further guidance from the New York court as to whether its instructions to settle the Tender Offer will violate the terms of the Orders. Thus, the settlement of the Tender Offer and the distribution of the Consent Payments pursuant to the Exchange Offer and Consent Solicitation have been delayed pending further guidance from the New York State court, according to the release.

Vitro filed a brief in New York State court yesterday arguing that settlement of the Tender Offer and distribution of the Consent Payments will not violate the terms of the Orders. Vitro is also seeking an order from the court stating that failure to settle the Tender Offer shall not be deemed a violation of any applicable agreements, regulations or laws. A hearing regarding both orders of attachment is currently scheduled for Dec. 16.

The involuntary chapter 11 proceedings that were filed by four dissident minority bondholders against Vitro’s U.S. subsidiaries remain pending before the U.S. Bankruptcy Court in Texas. Last week, Vitro’s U.S. subsidiaries filed an answer contesting the grounds for allowing those proceedings to continue. In their answer, Vitro America and its affiliates contest the basis for the involuntary petitions and assert affirmative defenses, including that Vitro America and its affiliates are generally paying their debts as they become due. A status conference before the Texas Bankruptcy Court has been scheduled for December 20. Vitro and its subsidiaries continue to vigorously act to protect their respective rights against the multiple actions being made by a relatively small group of bondholders, according to the release.

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