Mexicana’s chief creditor said in U.S. court documents filed this week that the airline is playing the U.S. and Mexican bankruptcy courts off one another, promising creditor protection in the U.S. and then getting countermanding orders in Mexico.
The bankrupt airline, which last month sought legal protection under the relatively new U.S. Chapter 15 code and Mexican concurso law, has been playing an "elaborate jurisdictional shell game," said creditor Banco Mercantil del Norte, or Banorte, which lent the airline $123.6 million as collateral to help secure U.S. accounts for processing credit card ticket purchases.
"Mexicana has aggressively sought contrary relief in different jurisdictions," Banorte said in a Sept. 1 filing in U.S. bankruptcy court, five days after the airline ceased flying.
Banorte said that the Mexicana case is the first to truly test the mettle of creditor protections provided by Chapter 15, in which a foreign company with U.S.-based assets files for bankruptcy protection.
"Mexicana has, from the inception of this case, leaned heavily on every weak joint of this young law to exploit gaps, where no case law has yet been written," Banorte said.
The creditor wants the U.S. court to take possibly precedent-setting action, saying the court should not recognize Mexicana’s bankruptcy filing in Mexico unless:
• The bank’s collateral funds are better protected.
• Mexicana carves out the bank’s rights from any Mexican court orders abridging those rights.
• Mexicana is barred from seeking any order or other relief in Mexico or elsewhere that would undermine the protections afforded to Banorte under U.S. law.
• U.S. and Mexican court officials talk to each other to ensure the protection of secured creditors in both proceedings.
Otherwise, the bank said, its U.S.-based cash collateral would go unprotected, which could possibly represent the unlawful taking of its property and a violation of its Fifth Amendment rights.
The bank cited U.S. bankruptcy code, which says the court "is entitled to communicate directly with, or to request information or assistance directly from, a foreign court or a foreign representative, subject to the rights of a party in interest."
No court, after Chapter 15 provisions were enacted about five years ago, has ruled on the specific question of whether a secured creditor’s protection is "fundamental policy," Banorte said.
Banorte discovered how fleeting that protection could be, it said, when Mexicana agreed on Aug. 18 to carve out the bank from a preliminary injunction order issued by the U.S. court preventing creditors from access to any of the airline’s assets.
Just two days later, Banorte said, Mexicana then went to the Mexican court to get a stay that prevented the creditor from the kind of access the airline had agreed to provide in U.S. court proceedings.
