REVISED January 7, 2013

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-10542

In the Matter of: VITRO SAB DE CV,

Debtor

___________________________

AD HOC GROUP OF VITRO NOTEHOLDERS,

Appellant

v.

VITRO SAB DE CV,

Appellee

___________________________

________________________

Appeal from the United States District Court

for the Northern District of Texas

________________________

Consolidated with No. 12-10689

In the Matter of: VITRO SAB DE CV,

Debtor

___________________________

VITRO SAB DE CV,

United States Court of Appeals

Fifth Circuit

F I L E D

November 28, 2012

Lyle W. Cayce

Clerk
Nos. 12-10542, 12-10689, 12-10750

2

Appellant

v.

AD HOC GROUP OF VITRO NOTEHOLDERS; WILMINGTON TRUST,

NATIONAL ASSOCIATION, solely in its capacity as indenture trustee; U.S.

BANK NATIONAL ASSOCIATION,

Appellees

_____________________________

________________________

Appeal from the United States Bankruptcy Court 

for the Northern District of Texas

________________________

Consolidated with No. 12-10750

In the Matter of: VITRO SAB DE CV

Debtor

______________________________

FINTECH INVESTMENTS, LIMITED,

Appellant

v.

AD HOC GROUP OF VITRO NOTEHOLDERS; WILMINGTON TRUST,

NATIONAL ASSOCIATION, solely in its capacity as indenture trustee; U.S.

BANK NATIONAL ASSOCIATION,

Appellees

________________________

Appeal from the United States Bankruptcy Court 

for the Northern District of Texas

________________________

Before KING, SMITH, and BARKSDALE, Circuit Judges.
Nos. 12-10542, 12-10689, 12-10750

3

KING, Circuit Judge:

Consolidated before us are three cases relating to the Mexican

reorganization proceeding of Vitro S.A.B. de C.V., a corporation organized under

the laws of Mexico. The Ad Hoc Group of Vitro Noteholders, a group of creditors

holding a substantial amount of Vitro’s debt, appeal from the district court’s

decision affirming the bankruptcy court’s recognition of the Mexican

reorganization proceeding and Vitro’s appointed foreign representatives under

Chapter 15 of the Bankruptcy Code. Vitro and one of its largest third-party

creditors, Fintech Investments, Ltd., each appeals directly to this court the

bankruptcy court’s decision denying enforcement ofthe Mexican reorganization

plan because the plan would extinguish the obligations of non-debtor guarantors.

For the following reasons, we affirm the district court’s judgment recognizing the

Mexican reorganization proceeding and the appointment of the foreign

representatives. We also affirm the bankruptcy court’s order denying

enforcement of the Mexican reorganization plan.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Vitro S.A.B. de C.V. and the 2008 Financial Crisis

Vitro S.A.B. de C.V. (“Vitro”) is a holding company that, together with its

subsidiaries, constitutes the largest glass manufacturer in Mexico. Originally

incorporated in 1909, Vitro operates manufacturing facilities in seven countries,

as well as distribution centers throughoutthe Americas and Europe, and exports

its products to more than 50 countries worldwide. Vitro employs approximately

17,000 workers, the majority of whom work in Mexico. Between February 2003

and February 2007, Vitro borrowed a total of approximately $1.216 billion,

predominately from United States investors. Vitro’s indebtedness is evidenced

by three series of unsecured notes. The first series was issued on October 22,

2003 and consisted of $225 million aggregate principal amount of 11.75% notes

due 2013; the second and third series were issued on February 1, 2007, and
Nos. 12-10542, 12-10689, 12-10750

4

consisted of $300 million of 8.625% notes due 2012 and $700 million of 9.125%

notes due 2017 (collectively the “Old Notes”). 

Payment in full of the Old Notes was guaranteed by substantially all of

Vitro’s subsidiaries (the “Guarantors”). The guaranties provide that the

obligations of the Guarantors will not be released, discharged, or otherwise

affected by any settlement or release as a result of any insolvency,

reorganization, or bankruptcy proceeding affecting Vitro. The guaranties

further provide that they are to be governed and construed under New York law

and include the Guarantors’ consent to litigate any disputes in New York state

courts. The guaranties state that “any rights and privileges that [Guarantors]

might otherwise have under the laws of Mexico shall not be applicable to th[e]

Guarant[ies].”

In the latter half of 2008, Vitro’s fortunes took a turn for the worse when

the global financial crisis significantly reduced demand for its products. Vitro’s

operating income declined by 36.8% from 2007 to 2008, and an additional 22.3%

from 2008 to 2009. In February of 2009, Vitro announced its intention to

restructure its debt and stopped making scheduled interest payments on the Old

Notes. 

B. Vitro Restructures Its Obligations

After Vitro stopped making payments on the Old Notes, it entered into a

series of transactions restructuring its debt obligations. On December 15, 2009,

Vitro entered into a sale leaseback transaction with Fintech Investments Ltd.

(“Fintech”), one of its largest third-party creditors, holding approximately $600

million in claims (including $400 million in Old Notes). Under the terms of this

agreement, Fintech paid $75 million in exchange for the creation, in its favor, of

a Mexican trust composed of real estate contributed by Vitro’s subsidiaries. This

real estate was then leased to one of Vitro’s subsidiaries to continue normal

operations. The agreement also gave Fintech the right to acquire 24% of Vitro’s
Nos. 12-10542, 12-10689, 12-10750

5

outstanding capital or shares of a sub-holding company owned by Vitro in

exchange for transferring Fintech’s interest in the trust back to Vitro or its

subsidiaries. 

Partly as a result of these transactions, Vitro generated a large quantity

of intercompany debt. Previously, certain of Vitro’s operating subsidiaries

directly and indirectly owed Vitro an aggregate of approximately $1.2 billion in

intercompany debt. As a result of a series of financial transactions in December

of 2009, that debt was wiped out and, in a reversal of roles, Vitro’s subsidiaries

became creditors to which Vitro owed an aggregate of approximately $1.5 billion

in intercompany debt. Despite requests by holders of Old Notes, Vitro did not

disclose these transactions. In August of 2010, Fintech purchased claims by five

banks holding claims against Vitro and its subsidiaries and extended the

maturity of various promissory notes issued by Vitro’s subsidiaries. Pursuant

to a “Lock-up Agreement” completed between Fintech and Vitro, Fintech also

agreed not to transfer any debt it held in Vitro unless such transfer was in line

with the terms of that agreement.

Only in October of 2010, approximately 300 days after completing the

transactions with its subsidiaries, did Vitro disclose the existence of the

subsidiary creditors. This took the transactions outside Mexico’s 270-day

“suspicion period,” during which such transactions would be subject to additional

scrutiny before a business enters bankruptcy.

C. Vitro Commences a Concurso Proceeding in Mexican Court

Between August 2009 and July 2010, Vitro engaged in negotiations with

its creditors and submitted three proposals for reorganization. Each was

rejected by creditors. After the last proposal, the Ad Hoc Group of Vitro

Noteholders (the “Noteholders”), a group of creditors holding approximately 60%

of the Old Notes, issued a press release “strongly recommend[ing]” that all

holders of the Old Notes deny consent to any reorganization plan that the
Nos. 12-10542, 12-10689, 12-10750

1 A concurso proceeding is the Mexican equivalent of a voluntary judicial reorganization

proceeding under United States law.

2 A conciliador is an individual appointed by the Instituto Federal de Especialistas de

ConcursosMercantiles—theFederal Institute of Specialists of InsolvencyProcedures—to serve

as a quasi-judicial officer with certain responsibilities in a concurso proceeding, including filing

an initial list of recognized claims, mediating a plan, and, if necessary to protect the debtor’s

estate, managing the debtor’s business. A conciliador’s pay is based on the number of

recognized claims in a concurso proceeding, a fact the Noteholders argue encouraged him to

recognize intercompany claims. The Noteholders also point out that, in this case, the

conciliador’s law firm provided legal services to Vitro since 2001, and that the conciliador

retained, as his financial advisor, a firm that also acted as Vitro’s internal auditor.

6

Noteholders had not approved. On November 1, 2010, Vitro disclosed its

intention to commence a voluntary reorganization proceeding in Mexico,

together with a pre-packaged plan of reorganization. On December 13, 2010,

Vitro initiated in a Mexican court a concurso proceeding under the Mexican

Business Reorganization Act, or Ley de Concursos Mercantiles (“LCM”).1

The Mexican court initially rejected Vitro’s filing on January 7, 2011,

because Vitro could not reach the 40% creditor approval threshold necessary to

file a concurso petition without relying on intercompany claims held by its

subsidiaries. On April 8, 2011, that decision was overruled on appeal and Vitro

was then declared to be in bankruptcy, or concurso mercantil. Pursuant to

Mexican law, Javier Luis Navarro Velasco was appointed as conciliador.

2

The conciliador was tasked with filing an initial list of recognized claims

and mediating the creation of a reorganization plan. The conciliador did so, and

on August 5, 2011, filed a proposed final list of recognized creditors, which

included those subsidiaries holding intercompany debt. The conciliador then

negotiated terms of a reorganization plan between Vitro and the recognized

creditors to submit to the Mexican court for approval. Throughout this process,

the parties were apparently in frequent contact with the Mexican court on an ex

parte basis.

1. Terms of the Concurso Plan
Nos. 12-10542, 12-10689, 12-10750

7

On December 5, 2011 the conciliador submitted to the Mexican court a

proposed restructuring plan (the “Concurso plan” or “Plan”) substantially

identical to the one Vitro had originally proposed. Under the terms of the Plan,

the Old Notes would be extinguished and the obligations owed by the

Guarantors would be discharged. Specifically, the Plan provides that: 

[O]nce this Agreement is approved by the Court . . . this

Agreement . . . will substitute, pay, replace and

terminate the above obligations, instruments,

securities, agreements and warranties in which were

agreed upon Approved Credits and, therefore . . . will

terminate personal guarantees granted a third and/or

direct and indirect subsidiaries [sic] of Vitro with

regards to the obligations, instruments, securities and

agreements that gave rise to the Approved Credits.

The Plan further provides that Vitro would issue new notes payable in

2019 (the “New 2019 Notes”), with a total principal amount of $814,650,000.

The New 2019 Notes would be issued to Vitro’s third-party creditors (not

including those subsidiaries holding intercompany debt, who would forgo their

pro rata share of the Plan’s consideration and instead receive other promissory

notes). The New 2019 Notes would bear a fixed annual interest rate of 8.0%, but

would “not have . . . payments of principal during the first 4 (years) years [sic]

. . . and from the fifth year of operation and until the seventh year . . . will have

repayments or payments of [a]total principal amount of $23,960,000.00 USD . . .

payable semiannually on June 30 and December 31 of each year and the

remaining balance upon due date.” The New 2019 Notes would also “be

unconditionally and supportively guaranteed for each of the Guarantors.”

Payment under the New 2019 Notes would go into a third-party payment trust,

which would deliver payment to those creditors who had consented to the Plan.

A second trust would be created to pay non-consenting creditors upon their

written agreement to the terms of the Plan. In addition to the New 2019 Notes,

Vitro would also provide to the holders of the Old Notes $95,840,000 aggregate
Nos. 12-10542, 12-10689, 12-10750

3 Of the creditors resisting veto of the Plan, approximately 360 were Vitro employees

to each of whom Vitro had issued a note in the amount of $1,000 prior to the Plan’s filing.

8

principal amount of new mandatory convertible debt obligations (“MCDs”) due

in 2015 with an interest rate of 12%, convertible into 20% equity in Vitro if not

paid at full maturity. Finally, the Plan also provided cash consideration of

approximately $50 per $1000 of principal of Old Notes. 

2. The Concurso Plan is Approved

Under Mexican law, approval of a reorganization plan requires votes by

creditors holding at least 50% in aggregate principal amount of unsecured debt.

As distinguished from United States law, Mexico does not divide unsecured

creditors into interest-aligned classes, but instead counts the votes of all

unsecured creditors, including insiders, as a single class. As a result, although

creditors holding 74.67% in aggregate principal amount of recognized claims

voted in favor of the plan, over 50% of all voting claims were held by Vitro’s

subsidiaries in the form of intercompany debt. The 50% approval threshold

could not have been met without the subsidiaries’ votes. After the initial

approval, the LCM provides a period during which objecting creditors can veto

the plan. A veto requires agreement by recognized creditors holding a minimum

of 50% in aggregate principal amount of debt or by recognized creditors

numbering at least 50% of all unsecured creditors. As only 26 of the 886

recognized creditors sought to veto the Concurso plan, and as those creditors

held less than 50% of the aggregate recognized debt, the veto failed.3

The Mexican court approved the Concurso plan on February 3, 2012. On

February 23, 2012, the Plan went into effect, and Vitro issued New 2019 Notes

and MCDs and paid restructuring cash into two third-party paymenttrusts, one

for consenting creditors and the other for non-consenting creditors. The

Concurso plan approval order has been appealed, and such appeal has been

accepted by, and is currently pending in, the Mexican judicial appellate system;
Nos. 12-10542, 12-10689, 12-10750

4 Letters submitted to this court demonstrate that substantially all of the issues

relating to enforcement of the Plan before us are also being appealed in Mexican courts.

5 This matter proceeded to trial on March 31, 2011. As a result of this proceeding, four

of Vitro’s subsidiaries requested permission to sell substantially all their assets. Vitro’s

subsidiaries continued resisting the Noteholders’ efforts and, initially, received favorable

judgments that they were generally paying their debts as they became due or that no demand

for payment had been made at the time the involuntary proceedings were commenced. That

decision was appealed and, on August 28, 2012, the United States District Court for the

Northern District of Texas held that the bankruptcy court erred in its findings and vacated

that court’s order.

9

no stay of effectiveness of the Concurso plan was entered.4

D. Objecting Creditors Resist Enforcement

While objecting to the concurso proceeding in Mexico, creditors dissatisfied

with Vitro’s reorganization efforts attempted to collect on the Old Notes and

guaranties in a variety of ways. By April 2010, Vitro had received acceleration

notices for all the Old Notes. On November 17, 2010, involuntary Chapter 11

petitions were filed against fifteen Guarantors domiciled in the United States.5

Various holders of Old Notes also commenced two substantially identical

lawsuits in New York state court against Vitro and 49 Guarantors, resulting in

orders of attachment with respect to any property located in New York.

Parallel to the concurso proceeding, in August 2011, Wilmington Trust,

National Association (“Wilmington”),the indenture trustee for the Old Notes due

in 2012 and 2017, filed suit in New York state court against various of the

Guarantors, seeking a declaratory judgment confirming the Guarantors’

obligations under the related indentures. The state court granted partial

summary judgment in Wilmington’s favor on December 5, 2011. The court held

that New York law applied to the dispute and that under the unambiguous

terms of the relevant Old Notes, “any non-consensual release, discharge or

modification of the obligations of the Guarantors . . . is prohibited.” Wilmington

Trust v. Vitro Automotriz, S.A. de C.V., 943 N.Y.S.2d 795 (table), 2011 WL

6141025, at *6 (N.Y. Sup. Ct. Dec. 5, 2011). The court went on to find, however,
Nos. 12-10542, 12-10689, 12-10750

6 Wilmington and other creditors then sought a temporary restraining order directing

the Guarantors to withdraw their consent to the Concurso plan. The state court granted the

TRO, but that order was stayed by the bankruptcy court on the basis that the TRO interfered

with Vitro’s rights in a lockup agreement between it and its subsidiaries, and the concurso

proceeding. That order was separately appealed and is before another panel of this court, Case

No. 11-11239.

Objecting creditors also took further legal action to resist Vitro’s reorganization efforts,

including involuntary concurso proceedings in Mexico.

7 This filing actually constituted Vitro’s second filing of a petition for recognition under

Chapter 15. Vitro first filed such a petition on December 14, 2010, but, by agreement of the

parties, withdrew that petition after the Mexican court initially denied Vitro’s entry into

concurso mercantil.

8 The travel restrictions on Sanchez-Mujica were later lifted, permitting him to travel

to the United States and testify at trial.

10

that “whether such prohibitive provisions may be modified or eliminated by

applicable Mexican laws is not at issue here.” Id. at *5.6 A separate suit brought

by U.S. Bank National Association (“U.S. Bank”), the indenture trustee for the

Old Notes due in 2013, achieved the same outcome.

E. Vitro Commences a Chapter 15 Proceeding in the United States

On October 29, 2010, Vitro’s Board of Directors appointed Alejandro

Sanchez-Mujica to act as Vitro’s foreign representative. On April 14, 2011,

Sanchez-Mujica commenced a Chapter 15 proceeding in United States

bankruptcy court by filing a petition for recognition of the Mexican concurso

proceeding.7 The petition was originally filed in the United States Bankruptcy

Court for the Southern District of New York, but, on May 13, 2011, by motion of

objecting creditors, venue was transferred to the United States Bankruptcy

Court for the Northern District of Texas. Because Sanchez-Mujica could not

leave Mexico—a result of certain travel restrictions imposed by the Mexican

court because of his role in Vitro’s restructuring—Vitro filed a supplemental

petition to recognize Javier Arechavaleta-Santos, another appointee of Vitro’s

Board of Directors, as “co-foreign representative.”8 The bankruptcy court, over

objections, held thatthe Mexican reorganization proceeding was a “foreign main
Nos. 12-10542, 12-10689, 12-10750

9 A “foreign main proceeding” is “a foreign proceeding pending in the country where the

debtor has the center of its main interests,” 11 U.S.C. § 1502(4), and is to be distinguished

from a foreign nonmain proceeding, which is “a foreign proceeding . . . pending in a country

where the debtor has an establishment,” id. § 1502(5). Depending on whether a proceeding

is a foreign main or a foreign nonmain, certain Chapter 15 relief will be automatic or

discretionary. See In re Ran, 607 F.3d 1017, 1026 (5th Cir. 2010).

10 Previously, on June 24, 2011, the bankruptcy court had issued a preliminary

injunction in Vitro’s favor to protect its assets, but denied such relief as to the guarantors.

11

proceeding” and approved the petition confirming Sanchez-Mujica and

Arechavaleta-Santos as foreign representatives pursuant to 11 U.S.C. § 1515

and § 1517.9 The United States District Court for the Northern District of Texas

affirmed the bankruptcy court’s order. In re Vitro, S.A.B. de C.V., 470 B.R. 408

(N.D. Tex. 2012) (Vitro I). That decision has been appealed, Case No. 12-10542,

and is one of the cases consolidated in this appeal.

On March 2, 2012, Vitro’s foreign representatives filed a motion in

bankruptcy court entitled “Motion of Foreign Representatives of Vitro S.A.B. de

C.V. for an Order Pursuant to 11 U.S.C. §§ 105(a), 1507 and 1521 to (I) Enforce

the Mexican Plan of Reorganization of Vitro S.A.B. de C.V., (II) Grant a

Permanent Injunction, and (III) Grant Related Relief” (the “Enforcement

Motion”). The Noteholders, Wilmington, and U.S. Bank (collectively, the

“Objecting Creditors”) objected, and the matter proceeded to trial on June 4,

2012. Following a four-day trial, in which hundreds of exhibits were presented

and several witnesses testified, the bankruptcy court denied the Enforcement

Motion. In re Vitro, S.A.B. de C.V., 473 B.R. 117 (Bankr. N.D. Tex. 2012) (Vitro

II). As part of that ruling, the court also denied Vitro’s motion to enjoin the

Objecting Creditors from initiating litigation against the Guarantors.10 To

permit Vitro time to appeal, the bankruptcy court did, however, extend a

previously issued temporary restraining order. Vitro and Fintech have appealed

the bankruptcy court’s decision, which has been certified for direct appeal, and

Case Nos. 12-10689 (Vitro’s appeal) and 12-10750 (Fintech’s appeal) were
Nos. 12-10542, 12-10689, 12-10750

11 Although brought under separate case numbers, the only substantive difference

between the cases is that Vitro is the appellant in Case No. 12-10689, while Fintech is the

appellant in Case No. 12-10750.

12

subsequently consolidated with the other case before us.11 Vitro subsequently

sought, and was granted on June 28, 2012, an order by this court staying the

expiration of the bankruptcy court’s temporary restraining order.

II. STANDARD OF REVIEW

We review a district court’s affirmance of a bankruptcy court’s decision by

applying the same standard of review that the district court applied. In re

Martinez, 564F.3d 719, 725-26 (5th Cir. 2009). Accordingly, questions of fact are

reviewed for clear error and conclusions of law are reviewed de novo. Id. at 726.

Mixed questions of law and fact are reviewed de novo. In re McLain, 516 F.3d

301, 307 (5th Cir. 2008). We review a bankruptcy court’s decision on direct

appeal under the same standards. By contrast, “[w]e review a denial of

declaratory or injunctive relief for abuse of discretion.” In re Schimmelpenninck,

183 F.3d 347, 353 (5th Cir. 1999). A court’s decision to grant comity is also

reviewed for abuse of discretion. Int’l Transactions, Ltd. v. Embotelladora Agral

Regiomontana, SA de CV, 347 F.3d 589, 593 (5th Cir. 2003) (applying abuse of

discretion standard to review district court’s grant of comity to Mexican

bankruptcy court’s ex parte order); see also In re Qimonda AG Bankr. Litig., 433

B.R. 547, 556 (E.D. Va. 2010).

III. CHAPTER 15

The dispute before us arises under Chapter 15 ofthe Bankruptcy Code and

broadly involves two issues: recognition of the foreign representatives and

enforcement of the Concurso plan. As to the first, on April 14, 2011, SanchezMujica and Arechavaleta-Santos, as co-foreign representatives, filed a petition

seeking recognition of the concurso proceeding under Chapter 15. The

Noteholders objected that Sanchez-Mujica and Arechavaleta-Santos were not
Nos. 12-10542, 12-10689, 12-10750

13

properly appointed as foreign representatives because they were not appointed

by the Mexican court and because Vitro did not have the powers of a debtor in

possession. The bankruptcy court granted recognition of the concurso proceeding

as a foreign main proceeding under 11 U.S.C. § 1517. On appeal, the district

court affirmed, holding that it was sufficient that Sanchez-Mujica and

Arechavaleta-Santos were authorized as co-foreign representatives in the

context of a foreign bankruptcy proceeding and that Vitro retained sufficient

control over its business to be a debtor in possession. The Noteholders appeal,

raising substantially the same arguments before us thatthey raised in the lower

courts.

Because recognition of a proceeding under Chapter 15 is a precondition for

the more substantive relief Vitro seeks in the Enforcement Motion, we will

resolve the recognition issue first. We hold that the bankruptcy court and the

district court correctly interpreted Chapter 15 as not requiring official court

appointment. We further find that the term “foreign representatives” was

intended to include debtors in possession, including those that may not meet

Chapter 11’s definition of debtors in possession, and that Vitro retained enough

authority over its affairs to be a debtor in possession and could thus appoint

Sanchez-Mujica and Arechavaleta-Santos as foreign representatives.

Accordingly, we affirm the district court’s ruling affirming the bankruptcy

court’s order.

We then address the Enforcement Motion. On March 2, 2012, Vitro’s coforeign representatives filed a motion seeking “to 1) give full force and effect in

the United States to the Concurso Approval Order, 2) grant a permanent

injunction prohibiting certain actions in the United States against Vitro SAB,

as well as its non-debtor subsidiaries, and 3) grant certain related relief.” Vitro

II, 473 B.R. at 120-21 (quotation marks omitted). The bankruptcy court denied

relief under 11 U.S.C. §§ 1507, 1521, and 1506 because approval of the Plan
Nos. 12-10542, 12-10689, 12-10750

12 As Professor Jay Lawrence Westbrook has previously explained, the Model Law,

along with the European Union Insolvency Regulation (“EU Regulation”), and the American

Law Institute’s Principles of Cooperation in Transnational Insolvency Cases Among Members

of the North American Free Trade Agreement (“ALI Principles”), was a response to

international trade and “the growth of multinational enterprise,” as well as “the increased

incidence of multinational financial failure.” Jay Lawrence Westbrook, Multinational

Enterprises in General Default: Chapter 15, the ALI Principles, and the EU Insolvency

Regulation, 76 Am. Bankr. L.J. 1, 1-2 (2002). Of the three, the EU Regulation “served as the

source of some of the key concepts adopted in both the Model Law and the ALI Principles.” Id.

at 2. The ALI Principles, by contrast, were the last to be approved, and thus “in some

important respects represent the next generation of reform.” Id.

13 While § 304 has been replaced by Chapter 15, caselaw applying that section remains

relevant to evaluating requests for relief. See In re Atlas Shipping A/S, 404 B.R. 726, 738

(Bankr. S.D.N.Y. 2009); Leif M. Clark & Karen Goldstein, Sacred Cows: How to Care for

Secured Creditors’ Rights in Cross-Border Bankruptcies, 46 Tex. Int’lL.J. 513, 524 (2011)(“Not

surprisingly, the case law under former § 304 is still relevant to the interpretation of Chapter

15, especially as it concerns the remedies available to a foreign representative once recognition

14

would extinguish claims held by the Objecting Creditors against the

subsidiaries. Id. at 131. Vitro and Fintech appeal this decision solely on the

issue of whether the bankruptcy court erred as a matter of law in refusing to

enforce the Concurso plan because thePlan novated guaranty obligations of nondebtor parties. While the relief available under Chapter 15 may, in exceptional

circumstances, include enforcing a foreign court’s order extinguishing the

obligations of non-debtor guarantors, Vitro has failed to demonstrate that

comparable circumstances were present here. Because Vitro has not done so, we

affirm the bankruptcy court’s decision denying the Enforcement Motion.

A. Chapter 15 of the United States Bankruptcy Code

This case concerns a foreign bankruptcy proceeding for which recognition

and enforcement are sought under Chapter 15 of the United States Bankruptcy

Code. Chapter 15 was enacted in 2005 to implement the Model Law on CrossBorder Insolvency (“Model Law”) formulated by the United Nations Commission

on International Trade Law (“UNCITRAL”), and replaced former 11 U.S.C. §

304.12 See In re Ran, 607 F.3d at 1020; In re Iida, 377 B.R. 243, 256 (B.A.P. 9th

Cir. 2007).13 It was intended “to provide effective mechanisms for dealing with
Nos. 12-10542, 12-10689, 12-10750

has been granted.”).

15

cases of cross-border insolvency,” 11 U.S.C. § 1501(a), as well as to be “the

exclusive door to ancillary assistance to foreign proceedings,” thus

“concentrat[ing] control of these questions in one court.” H.R. Rep. No. 109-31,

pt. 1, at 110 (2005), reprinted in 2005 U.S.C.C.A.N. 88, 178. It was also intended

to increase legal certainty, promote fairness and efficiency, protect and maximize

value, and facilitate the rescue of financially troubled businesses. 11 U.S.C.

§ 1501(a). 

Central to Chapter 15 is comity. Comity is the “recognition which one

nation allows within its territory to the legislative, executive or judicial acts of

another nation, having due regard both to international duty and convenience,

and to the rights of its own citizens, or of other persons who are under the

protections of its laws.” Hilton v. Guyot, 159 U.S. 113, 164 (1895). “It is not a

rule of law, but one of practice, convenience, and expediency.” Overseas Inns

S.A. P.A. v. United States, 911 F.2d 1146, 1148 (5th Cir. 1990) (quotation marks

and citation omitted). Within the context of Chapter 15, however, it is raised to

a principal objective. Section 1501(a) begins by listing, as one of Chapter 15’s

goals, the furtherance of cooperation between domestic and foreign courts in

cross-border insolvency cases. Section 1508 goes on to provide that Chapter 15’s

provisions shall be interpreted by considering “its international origin, and the

need to promote an application of this chapter that is consistent with the

application of similar statutes adopted by foreign jurisdictions.” 11 U.S.C.

§ 1508. Comity considerations are explicitly included in the introduction to

§ 1507, and § 1509(b)(3) further provides that our courts “shall grant comity or

cooperation to the foreign representative” of a foreign proceeding.
Nos. 12-10542, 12-10689, 12-10750

16

Such a foreign representative must first petition a United States

bankruptcy court for recognition of a foreign proceeding. 11 U.S.C. §§ 1504,

1515. Chapter 15 defines such a foreign proceeding as:

[A] collective judicial or administrative proceeding in a

foreign country, including an interim proceeding, under

a law relating to insolvency or adjustment of debt in

which proceeding the assets and affairs of the debtor

are subject to control or supervision by a foreign court,

for the purpose of reorganization or liquidation.

11 U.S.C. § 101(23).

Only after a United States court recognizes a proceeding can “the foreign

representative . . . apply directly to a court in the United States for appropriate

relief in that court.” 11 U.S.C. § 1509(b)(2); see also United States v. J.A. Jones

Constr. Grp., LLC, 333 B.R. 637, 638 (E.D.N.Y. 2005). 

Chapter 15 provides for a broad range of relief. This includes the ability

to sue and be sued in United States courts, to apply directly to a United States

court for relief, to commence a non-Chapter 15 case, and to intervene in any

United States case to which the debtor is a party. In re Condor Ins. Ltd., 601

F.3d 319, 324 (5th Cir. 2010). Section 1520 also provides for certain automatic

relief upon recognition of a foreign main proceeding, like the one here, including

an automatic stay and the power to prevent transfers of the debtor’s property.

A bankruptcy courtis also empowered under § 1521(a)to “grant any appropriate

relief” necessary to “effectuate the purpose of this chapter and to protect the

assets of the debtor or the interests of the creditors.” Finally, § 1507(a) gives a

court authority to provide “additional assistance,” subject to certain restrictions

imposed by Chapter 15 and § 1507(b). 

In considering whether to grant relief, it is not necessary that the result

achieved in the foreign bankruptcy proceeding be identical to that which would

be had in the United States. It is sufficient if the result is “comparable.” In re

Schimmelpenninck, 183 F.3d at 364; Overseas Inns, 911 F.2d at 1149; see also
Nos. 12-10542, 12-10689, 12-10750

17

In re Sivec SRL, 476 B.R. 310, 324 (Bankr. E.D. Okla. 2012) (“The fact that

priority rules and treatment of claims may not be identical is insufficientto deny

a request for comity.”); In re Qimonda AG, 462 B.R. 165, 184 n.17 (Bankr. E.D.

Va. 2011); In re Petition of Garcia Avila, 296 B.R. 95, 112 (Bankr. S.D.N.Y.

2003). “[T]he foreign laws need not be identical to their counterparts under the

laws of the United States; they merely must not be repugnant to our laws and

policies.” In re Schimmelpenninck, 183 F.3d at 365.

But as discussed, whether any relief under Chapter 15 will be granted is

a separate question from whether a foreign proceeding will be recognized by a

United States bankruptcy court. The consolidated cases before us arise from

decisions addressing each of these issues. We first turn to whether Vitro’s coforeign representatives were properly recognized.

B. Recognition of Foreign Representatives

After initiation of a foreign bankruptcy proceeding, a “foreign

representative” may petition a United States court to recognize the proceeding

under Chapter 15. Chapter 15 defines a “foreign representative” as “a person or

body, including a person or body appointed on an interim basis, authorized in a

foreign proceeding to administer the reorganization or the liquidation of the

debtor’s assets or affairs or to act as a representative of such foreign proceeding.”

11 U.S.C. § 101(24). “A federal court’s recognition of representatives appointed

in the course of a foreign bankruptcy or liquidation proceeding is a matter of

comity—it is an acknowledgment of the validity of the foreign proceeding.”

Reserve Int’l Liquidity Fund, Ltd. v. Caxton Int’l Ltd., No. 09 Civ. 9021(PGG),

2010 WL 1779282, at *5 (S.D.N.Y. Apr. 29, 2010) (citing Finanz AG Zurich v.

Banco Economico S.A., 192 F.3d 240, 246 (2d Cir. 1999)). A duly recognized

foreign representative has the capacity to sue and be sued in the United States

and to apply directly to a United States court for relief, and a foreign
Nos. 12-10542, 12-10689, 12-10750

18

representative is entitled to the comity and cooperation of all United States

courts. 11 U.S.C. § 1509. 

Three requirements, contained in § 1517, must be met before a foreign

proceeding will be recognized:

(a) Subject to section 1506, after notice and a

hearing, an order recognizing a foreign

proceeding shall be entered if--

(1) such foreign proceeding for which

recognition is sought is a foreign main

proceeding or foreign nonmain proceeding

within the meaning of section 1502;

(2) the foreign representative applying for

recognition is a person or body; and

(3) the petition meets the requirements of

section 1515.

11 U.S.C. § 1517.

Section 1515, in turn, provides the following procedural requirements:

(a) A foreign representative applies to the court for

recognition of a foreign proceeding in which the

foreign representative has been appointed by

filing a petition for recognition.

(b) A petition for recognition shall be accompanied

by--

(1) a certified copy of the decision commencing

such foreign proceeding and appointing the

foreign representative;

(2) a certificate from the foreign court

affirming the existence of such foreign

proceeding and of the appointment of the

foreign representative; or

(3) in the absence of evidence referred to in

paragraphs (1) and (2), any other evidence

acceptable to the court of the existence of

such foreign proceeding and of the

appointment of the foreign representative.

(c) A petition for recognition shall also be

accompanied by a statement identifying all
Nos. 12-10542, 12-10689, 12-10750

14The district courtwas skeptical ofwhetherSanchez-Mujica andArechavaleta-Santos,

as co-foreign representatives, could properly constitute a person or body under 11 U.S.C.

§ 101(24) and § 1517(a)(2). Vitro I, 470 B.R. at 410 n.*. The source for this skepticism is

unclear, and neither the parties nor the district court explores the matter further. Because

§ 101(41) provides that “[t]he term ‘person’ includes individual, partnership, and corporation,”

there is little doubt that Sanchez-Mujica and Arechavaleta-Santos, both natural persons,

qualify as a “person or body.” This is especially so because the Bankruptcy Code utilizes the

19

foreign proceedings with respect to the debtor

that are known to the foreign representative.

(d) The documents referred to in paragraphs (1) and

(2) of subsection (b) shall be translated into

English. The court may require a translation

into English of additional documents.

11 U.S.C. § 1515.

These requirements are to be strictly construed in line with our holding

that the requisite analysis is not a “rubber stamp exercise,” and that “[e]ven in

the absence of an objection, courts must undertake their own jurisdictional

analysis and grant or deny recognition under Chapter 15 as the facts of each

case warrant.” In re Ran, 607 F.3d at 1021. 

Neither Sanchez-Mujica nor Arechavaleta-Santos, the recognized foreign

representatives in this case, was appointed by a foreign court or tribunal. Both

were voted into their positions by Vitro’s Board of Directors. The bankruptcy

court recognized the concurso proceeding under Chapter 15 and the district court

affirmed, holding that whether a given individual could act as a foreign

representative was a matter of United States law, and that it was unnecessary

for a foreign representative to be appointed by a court. The court’s holding

rested on its analysis of § 101(24)’s language and cases applying that subsection,

which showed that it was sufficient for a foreign representative to be authorized

in the context of a foreign bankruptcy proceeding. Vitro I, 470 B.R. at 411-13.

The district court further determined that Vitro was the Mexican equivalent of

a “debtor in possession,” able to administer its own reorganization, and was thus

able to appoint a foreign representative under Chapter 15. Id. at 412.14
Nos. 12-10542, 12-10689, 12-10750

word “includes” in a non-limiting capacity. 11 U.S.C. § 102(3). This means that § 101(41)

potentially includes an even broader range of entities. See In re Oversight & Control Comm’n

of Avanzit, S.A., 385 B.R. 525, 540 (Bankr. S.D.N.Y. 2008) (holding oversight commission was

person or body within meaning of § 1517(a)).

20

On appeal, the Noteholders argue that the individuals appointed here do

not satisfy Chapter 15’s definition of “foreign representatives” for two reasons.

First, neither was “authorized in a foreign proceeding,” because neither was

appointed by a foreign court or administrative tribunal. 11 U.S.C. § 101(24). In

support,the Noteholders rely on § 101(23)’s definition of“foreign proceeding,” as

well as 11 U.S.C. §§ 1515(a), 1515(b)(1)-(2), and 1509(b)(2). Second, the

Noteholders argue that even if Chapter 15 did not require such an appointment,

the foreign representatives still did not qualify for their positions because they

did not have the authority “to administer the reorganization or the liquidation

of the debtor’s assets or affairs or to act as a representative of such foreign

proceeding.” 11 U.S.C. § 101(24).

Vitro responds that the plain language of § 101(24) does not require court

appointment and thatthis conclusion is support by both Chapter 15’s legislative

history and UNCITRAL’s Model Law. Vitro further argues that § 101(24) was

intended to apply to a “debtor in possession,” like Vitro, and thus it had the

power to appoint individuals as foreign representatives of the concurso

proceeding.

Because the district court correctly interpreted § 101(24), defining foreign

representatives as having been appointed in the context of a foreign proceeding,

and because Vitro, as a debtor in possession, met the requirements of that

subsection, we affirm the district court’s decision. We address each of these

points in turn.
Nos. 12-10542, 12-10689, 12-10750

21

1. Authorized in a Foreign Proceeding

The Noteholders point to numerous parts of Chapter 15 that allegedly

show that a foreign court must explicitly authorize individuals or bodies to act

as representatives. Contrary to the Noteholders’ interpretation, we do not find

that any of Chapter 15’s provisions requires action by a foreign tribunal.

We interpret statutes according to their plain meaning. Gaddis v. United

States, 381 F.3d 444, 472 (5th Cir. 2004). Section 101(24)—defining the term

“foreign representative”—is wholly devoid of any statement that a foreign

representative must be judicially appointed. The definition’s requirement that

a representative be “authorized in a foreign proceeding” is certainly compatible

with appointment by a foreign court, but it is hardly necessary. As the district

court observed, it would be equally compatible with a requirement that an

individual be appointed “in the context of” a foreign proceeding. Vitro I, 470 B.R.

at 411. It could also mean during, or in the course of, a foreign proceeding.

The other provisions the Noteholders identify suffer from the same defect.

Section 1515(a) provides that “[a] foreign representative applies to the court for

recognition of a foreign proceeding in which the foreign representative has been

appointed” and requires that a petition for recognition be accompanied by either,

1) “a certified copy of the decision commencing such foreign proceeding and

appointing the foreign representative,” 2) “a certificate from the foreign court

affirming the existence of such foreign proceeding and of the appointment of the

foreign representative,” or 3) other evidence “of such foreign proceeding and of

the appointment of the foreign representative.” 11 U.S.C. § 1515. None of these

provisions states who has the official authority to appoint a foreign

representative. At best, they provide the context in which a foreign

representative should be appointed. By comparison, § 1509(b)(2) states that if

a court grants recognition to a foreign proceeding, it shall grant “comity or

cooperation” to the foreign representative. Although use of the word “comity” 
Nos. 12-10542, 12-10689, 12-10750

15 The Noteholders point out that none of these decisions entailed a challenge to the

foreign representatives’ appointment. While correct, in the context of the issue above, this fact

does not diminish their persuasive value. Assuming the Noteholders’ interpretation was

correct, and a foreign representative had to show it was appointed by a foreign tribunal to

receive Chapter 15 relief, it would be irrelevant whether another party objected because the

court would still need to determine whether the appointment was correct as a threshold matter

prior to granting recognition. See In re Ran, 607 F.3d at 1021.

22

connotes recognition of another judicial proceeding, the word “cooperation”

suggests a much broader meaning.

Caselaw supports our interpretation. To be sure, foreign representatives

have been appointed by foreign tribunals in many cases. One such case was In

re Grand Prix Associates, Inc., where the court specifically held that § 1517(a)

was satisfied where the purported foreign representative was able to present an

order by the foreign court appointing it as the foreign representative of the

business entities in question. No. 09-16545 (DHS), 2009 WL 1410519, at *5

(Bankr. D.N.J. May 18, 2009); see also In re Innua Canada Ltd., No. 09-16362

(DHS), 2009 WL 1025090, at *4-5 (Bankr. D.N.J. Apr. 15, 2009) (receivership

order entered by Canadian court stated foreign representative had capacity to

commence Chapter 15 proceeding); In re Oversight, 385 B.R. at 534 (Spanish

insolvency court had power to appoint foreign representative for Chapter 15

purposes); In re Basis Yield Alpha Fund (Master), 381 B.R. 37, 46 n.30 (Bankr.

S.D.N.Y. 2008); In re Tri-Cont’l Exch. Ltd., 349 B.R. 627, 632 (Bankr. E.D. Cal.

2006). But the district court identified numerous cases cited by the bankruptcy

court that, although not binding, demonstrate that recognition is routinely

granted to petitioners appointed by Mexican debtors to serve as foreign

representatives. Vitro I, 470 B.R. at 412 (listing cases).15

The Mexican court’s actions make it equally apparent that Sanchez-Mujica

and Arechavaleta-Santos were properly appointed. It is undisputed that the

Mexican court had the power to enjoin Sanchez-Mujica and Arechavaleta-Santos

from acting as foreign representatives. Yet, when presented with a motion
Nos. 12-10542, 12-10689, 12-10750

16 The conciliador also submitted a letter to the bankruptcy court, as a party in interest,

to the effectthat he agreed with the appointment of Sanchez-Mujica and Arechavaleta-Santos.

17 Article 2(d) provides that a foreign representative is “a person or body, including one

appointed on an interim basis, authorized in a foreign proceeding to administer the

reorganization or the liquidation of the debtor’s assets or affairs or to act as a representative

of the foreign proceeding.” UNCITRAL, UNCITRAL Model Law on Cross-Border Insolvency

with Guide to Enactment, art. 2(d) (1997), available at http://www.uncitral.org/pdf/

english/texts/insolven/insolvency-e.pdf (Model Law Guide). The only change in 11 U.S.C.

§ 101(24) is the addition of the words “including a person or body appointed,” in lieu of the

original “including one appointed.”

23

requesting such an order,the Mexican court denied itin full. The Mexican court

also refused to declare the conciliador to be the only person authorized to act as

foreign representative. In deciding not to enjoin the foreign representatives’

conduct, the Mexican court gave the representatives its tacit approval.16

Finally, our decision is informed by consideration of the Model Law, and

reports by the UNCITRAL Working Group on Insolvency Law (“Working

Group”). 11 U.S.C. § 1501(a) (purpose of Chapter 15 is to incorporate the Model

Law); see also In re Tri-Cont’l Exch. Ltd., 349 B.R. at 633 (treating as persuasive

authority the Guide to Enactment of the UNCITRAL Model Law on CrossBorder Insolvency); In re Condor, 601 F.3d at 326-27 & nn.37-40 (discussing and

citing Working Group). 

The definition of foreign representatives in § 101(24) closely follows the

language of Model Law Article 2(d).17 In drafting this definition, the Working

Group expressly rejected the requirement that a foreign representative be

“[specifically] authorized by statute or other order of court(administrative body)

to act in connection with a foreign proceeding.” UNCITRAL Rep. of the Working

Group on Insolvency Law on the Work of the Eighteenth Session, ¶ 111, U.N.

Doc. A/CN.9/419 (Dec. 1, 1995), available at

http://www.uncitral.org/uncitral/en/commission/working_groups/

5Insolvency.html (Dec. 1995 Rep.) (alteration in original). That definition was

rejected because of concerns that “the expressions would be unfamiliar and
Nos. 12-10542, 12-10689, 12-10750

18 For the same reason, we are not persuaded by the Noteholders’ argument that their

interpretation would result in a more objective and predictable appointment process.

19 The Noteholders argue that our understanding of § 101(24) would allow parties to

appoint competing foreign representatives, but that concern is invalid. The number of parties

who are authorized to “administer the reorganization of a debtor’s assets” is necessarily

limited. As we have said, we do not opine on the limits of authorization to “act as a

representative,” because that issue is not pertinent here.

24

might have the unintended effect of being unduly restrictive, since the list would

inevitably be incomplete.” Id. ¶ 112. The Working Group also declined to

include the word “specifically” because “it would be unusual for a State to

appoint an insolvency representative specifically to act abroad.” Id. ¶ 113. This

supports our conclusion that the Noteholders’ proposed interpretation—which

would require exactly such an appointment—is wrong.18

Accordingly, we conclude that Sanchez-Mujica and Arechavaleta-Santos

are not disqualified from serving as foreign representatives merely because they

were not the subject of an official court appointment.

2. Power to Administer the Reorganization or Liquidation of

a Debtor’s Assets or Affairs

Having determined that Chapter 15 does not require a foreign

representative to be appointed by court order, we still must address whether

Sanchez-Mujica’s and Arechavaleta-Santos’ appointments comport with the

remainder of § 101(24). In particular, § 101(24) requires that a foreign

representative have the authority “to administer the reorganization or the

liquidation of the debtor’s assets or affairs or to act as a representative of such

foreign proceeding.” 11 U.S.C. § 101(24). Vitro does not argue that SanchezMujica and Arechavaleta-Santos have the authority to represent the concurso

proceeding, and we therefore do not address that prong of § 101(24).19 The only

remaining question is whether they had administrative power over the

reorganization of Vitro’s business.

The district court held that Vitro could appoint its own foreign
Nos. 12-10542, 12-10689, 12-10750

20 Under Chapter 11, the term “debtor in possession” refers to the debtor itself, unless

an entity is serving as the debtor’s trustee pursuant to 11 U.S.C. § 322. “A debtor in

possession stands in the shoes of the bankruptcy trustee, generally having the same rights,

powers, duties and functions, with certain exceptions.” Soto-Rios v. Banco Popular de Puerto

Rico, 662 F.3d 112, 115 n.2 (1st Cir. 2011) (citing 11 U.S.C. § 1107(a)).

21 The Noteholders raise a number of additional arguments that are ultimately

unavailing. The Noteholders argue that, assuming Vitro could act as its own foreign

representative, it could not appoint others to that role. The Noteholders also argue that Vitro’s

appointment fails because it occurred prior to the concurso filing and because the appointment

creates a conflict of interest between Vitro and its creditors. Finally, they repeatedly point out

that the foreign representatives lacked the expertise necessary to serve in that role, and that

they abdicated their responsibilities by ceding decision-making authority to United States

counsel. The Noteholders cite no pertinent authority in support of these contentions.

25

representatives because, under Mexican law, a debtor continues to manage its

business during a concurso proceeding, making it akin to a “debtor in

possession.” Vitro I, 470 B.R. at 412.20 The Working Group clearly intended to

include foreign representatives of proceedings in which a debtor in possession

remains in control of its assets. Dec. 1995 Rep. ¶ 115. The National Bankruptcy

Review Commission, created by Congress in 1994 to make recommendations on

improving bankruptcy law and procedure, in its review of the Model Law,

reached the same conclusion. Nat’l Bankr. Rev. Comm’n, Bankruptcy: The Next

Twenty Years, Nat’l Bankr. Rev. Comm’n Final Rep., (1997), available at

http://govinfo.library.unt.edu/nbrc/reportcont.html (Nat’l Bankr. Comm’n).

The Noteholders, however, challenge whether Vitro can be classified as a

debtor in possession, and argue that such power is reserved for the conciliador

in a concurso proceeding. The Noteholders also point out that under Chapter 11,

a debtor in possession has the rights, powers, and duties of a Chapter 11 trustee,

which include the right to negotiate, file, and seek confirmation of a plan of

reorganization, and that Vitro lacked this authority.21

The Noteholders’ argument fails for relying exclusively on Chapter 11’s

definition of a debtor in possession. The Working Group’s decision to include

debtors in possession was not made on the basis of how United States law
Nos. 12-10542, 12-10689, 12-10750

26

defined the term. Rather, the Working Group understood debtors in possession

to include those cases “in which the debtor remained in control of its assets and

could technically be regarded as exercising administration type of functions,

although under the supervision of a judicial or administrative authority.” Dec.

1995 Rep. ¶ 115. The UNCITRAL Practice Guide on Cross-Border Insolvency

Cooperation similarly defines debtor in possession to mean “a debtor in

reorganization proceedings, which retains full control over the business, with the

consequence that the court does not appoint an insolvency representative.”

UNCITRAL, Practice Guide on Cross-Border Insolvency Cooperation 5 (July 1,

2009), available at http://www.uncitral.org/pdf/english/texts/insolven/

Practice_Guide_Ebook_eng.pdf. At least one court has understood foreign

representatives to include debtors in possession, including those in “debtor-inpossession reorganization proceedings in Latin American countries.” In re

Cenargo Int’l, PLC, 294 B.R. 571, 598 n.31 (Bankr. S.D.N.Y. 2003) (internal

quotation marks and citation omitted). We likewise hold that under Chapter 15

the correct analogy is not to whether a debtor meets Chapter 11’s definition of

a “debtor in possession,” but whether it meets that definition originally

envisioned by the drafters ofthe Model Law and incorporated into § 101(24). See

11 U.S.C. § 1508 (Chapter 15 to be interpreted by consideration of its

international origin, and consistent with application of similar foreign statutes);

Nat’l Bankr. Comm’n, supra, at 357 (definitions in Model Law are “carefully

constructed to include the United States Chapter 11 proceeding (and similar

debtor in possession reorganization proceedings in Latin America and

elsewhere)”).

Here, there is little doubt that Vitro met that definition. Vitro has

presented extensive evidence that it retained broad control over its affairs,

pursuant to various provisions of the LCM. See Ley de Concursos Mercantiles

[LCM] [Bankruptcy Law], Diario Oficial de la Federación [DO], as amended, 12
Nos. 12-10542, 12-10689, 12-10750

27

de mayo de 2000, art. 74 (debtor will be entrusted with enterprise’s management

throughout conciliation stage unless court grants conciliador’s requestto remove

debtor to protect the estate); id. art. 84 (debtor retains ability to litigate pending

claims under conciliador’s supervision). Commentary on the LCM agrees that

a board of directors generally remains in control and possession of its business

during a concurso proceeding. See Jonathan Graham-Canedo, Comparative

Analysis of Bankruptcy Legal Provisions from Mexico and the United States:

Which Legal System is More Attractive?, 6 DePaul Bus. & Com. L.J. 19, 27 (Fall

2007).

We further observe that if Vitro were not permitted to proceed as a debtor

in possession, with the power to appoint foreign representatives, it is unclear

who would. Any other potential candidate would be susceptible to the same

attacks raised by the Noteholders. For example, in a concurso proceeding the

conciliador acts as mediator between the debtor and creditors. A visitador only

inspects the debtor’s accounting books and records and determines whether the

debtor meets the LCM’s liquidity standard. The sindico is a receiver charged

with liquidating the business and selling its assets if a plan is not reached

within a specific period of time. None of these individuals possesses the full

authority the Noteholders argue is required under § 101(24).

Accordingly, we conclude that Vitro had the powers of a debtor in

possession for purposes of § 101(24) and affirm the district court’s decision

affirming the bankruptcy court’s order that Sanchez-Mujica and ArechavaletaSantos are properly appointed foreign representatives under Chapter 15.
Nos. 12-10542, 12-10689, 12-10750

28

C. Enforcement of the Plan

1. Vitro’s Request for Relief

In the Enforcement Motion, Vitro sought broad relief pursuant to 11

U.S.C. §§ 105(a), 1507, and 1521. Specifically, Vitro sought an order giving full

force and effect in the United States to the Mexican court’s order approving the

Concurso plan. Vitro further sought a permanent injunction prohibiting certain

actions in the United States against itself and its non-debtor subsidiaries,

specifically:

[A] permanent injunction enjoining all persons from

initiating or continuing any suit, action, extra-judicial

proceeding or other proceeding (including [already

commenced actions in New York state court]) or any

enforcement or collection process (including pursuant to

any judgment, notices of attachment or [levies,

restraining notices, or similar documentation]) in any

jurisdiction within the United States or its territories

. . . against Vitro SAB and/or the Old Guarantors . . . or

their Property . . . except as permitted under the

Concurso Plan or the Concurso Approval Order . . . .

If Vitro were to succeed in obtaining all the relief that it requested,

actions, executions, attachments, or other collection or enforcement processes

currently pending against Vitro or its subsidiaries would be “permanently

stayed, suspended, discharged, and dismissed.” Judgments already rendered

against it or its subsidiaries would be declared “null and void and of no further

force or effect.” Moreover, any entity having withheld payment to Vitro or its

subsidiaries as a result of Vitro’s default would immediately remit such

payments to the applicable party. Finally, Vitro and its subsidiaries would be

released from all liabilities with respect to any claims discharged under the

Concurso plan. Of course, the bankruptcy court could grant some, but not all,

of the relief requested.

The bankruptcy court held that the Concurso plan “which extinguishes the
Nos. 12-10542, 12-10689, 12-10750

29

guarantee claims ofthe Objecting Creditors that were given under an indenture

issued in the United States against non-debtor entities that are subsidiaries of

Vitro, should not be accorded comity to the extent it provides for the

extinguishment of the non-debtor guarantees of the indentures.” Vitro II, 473

B.R. at 132. The bankruptcy court specifically denied enforcement under

§§ 1507, 1521, and 1506. It denied relief under § 1507 because the Mexican

court’s approval order did “not provide for the distribution of proceeds of the

debtor’s property substantially in accordance with the order prescribed by Title

11 [of the Bankruptcy Code].” Id. “The Concurso plan provides drastically

different treatment in that the noteholders receive a fraction of the amounts

owed under the indentures from Vitro SAB and their rights against the other

obligors are cut off.” Id. Relief under § 1521 was inappropriate because the

Mexican court’s approval order “neither sufficiently protects the interests of

creditors in the United States, nor does it provide an appropriate balance

between the interests of creditors and Vitro SAB and its non-debtor

subsidiaries.” Id. Finally, the relief sought would not be allowed under Chapter

15 because “the protection of third party claims in a bankruptcy case is a

fundamental policy of the United States” and “the Concurso plan does not

recognize and protect such rights.” Id.

The circumstances under which the Plan was approved and the treatment

creditors received raise many questions that are not before us about whether

such a plan could be enforced under Chapter 15. The bankruptcy court explicitly

dealt with some of these questions, while flagging others for our consideration

without itself reaching them. Thus, for example, the bankruptcy court

considered whether, as alleged by the Objecting Creditors, the Mexican judicial

system and the concurso proceeding were corrupt, and should not be granted

comity for this reason. Addressing the Objecting Creditors’ expert—Dr. Stephen

D. Morris—who testified to a series of“suspicious circumstances” and “red flags”
Nos. 12-10542, 12-10689, 12-10750

22 The Objecting Creditors’ briefs reiterate many of the factual allegations they made

in the bankruptcy court, without addressing the bankruptcy court’s holdings on those

allegations. Because we affirm the bankruptcy court’s ultimate holding denying enforcement

to the Plan, we do not address those allegations further.

30

in the concurso proceeding,the bankruptcy court held that, although the witness

was knowledgeable and qualified to speak on corruption in Mexico generally, his

analysis of what impact such corruption had on this proceeding was

unpersuasive. The bankruptcy court therefore concluded that it “ha[d] not seen

evidence that the Mexican Proceeding [was] the product of corruption, or that

the LCM itself is a corrupt process,” and rejected the Objecting Creditors’

argument. Id. at 130. The bankruptcy court reached a similar conclusion as to

whether, as argued by the Objecting Creditors, enforcement would have an

adverse impact on credit markets. The court ultimately concluded that, while

testimony by Dr. Elaine Buckberg, a former economist at the International

MonetaryFund, was credible, her testimony did not quantify the negative effects

of enforcing the Plan, and thus the court could not conclude that enforcement

would adversely affect credit markets. Id. The bankruptcy court also

considered, but rejected, the argumentthat relief should not be granted because

the Mexican proceeding was “unfair.” Id. at 130-31. The bankruptcy court

observed that although there had been ex parte meetings, such meetings were

had by both sides and were, in fact, common in Mexico. Id. at 131. Responding

to the Objecting Creditors’ allegations that they were not permitted to raise

certain arguments in the Mexican court and thatthe conciliador was biased,the

bankruptcy court held that such arguments were better left for the Mexican

court system.22 Id.

The bankruptcy court did not reach two other arguments it described as

“[p]ossibl[y] [m]eritorious [o]bjections.” Id. at 132. These were that insiders

were allowed to vote in favor ofthe Plan, and that the Concurso plan violates the
Nos. 12-10542, 12-10689, 12-10750

31

absolute priority rule. Other arguments the bankruptcy court did not explicitly

address, but which might be subsumed under its other holdings, are that the

Concurso plan imposed a kind of “death trap” provision that precluded nonconsenting creditors from recovering anything. Another such argument is that

Mexico’s single-class voting made no distinctions between creditors with adverse

interests. Finally, a third such argument challenges the propriety of Vitro’s

orchestrating a balance transfer of several billion dollars between itself and its

subsidiaries, turning those subsidiaries into creditors, prior to entering into the

concurso proceeding and failing promptly to disclose the existence ofthese newly

minted insider creditors.

We need not concern ourselves with the vast majority of these issues, as

Vitro and Fintech have framed their appeal in terms of only one:

Whether the Bankruptcy Court erred as a matter of law

when, after it concluded that the Concurso Approval

Order was the product of a process that was not corrupt

or unfair to the Appellees, it refused to enforce the

Concurso Approval Order solely because the Concurso

plan novated guarantee obligations of non-debtor

parties and replaced them with new obligations of

substantially the same parties?

The issue Vitro and Fintech identify underpins the bankruptcy court’s

entire opinion. As that court summarized, “the Concurso plan approved in this

instance . . . extinguishes the guarantee claims of the Objecting Creditors that

were given under an indenture issued in the United States against non-debtor

entities that are subsidiaries of Vitro . . . . Such order manifestly contravenes the

public policy of the United States and is also precluded from enforcement under

§§ 1507, 1521 and 1522 of the Bankruptcy Code,” and would not be accorded

comity. Id. at 133.
Nos. 12-10542, 12-10689, 12-10750

32

2. Chapter 15’s Framework for Granting Relief

As already discussed, “[a] central tenet of Chapter 15 is the importance of

comity in cross-border insolvency proceedings.” In re Cozumel Caribe, S.A. de

C.V., --- B.R. ----, 2012 WL 5508303 (Bankr. S.D.N.Y. Nov. 14, 2012). “The

extent to which the law of one nation, as put in force within its territory,

whether by executive order, by legislative act, or by judicial decree, shall be

allowed to operate within the dominion of another nation, depends upon what

our greatest jurists have been content to call the comity of nations.’” Hilton, 159

U.S. at 164. In applying the principles of comity, we “take[ ] into account the

interests of the United States, the interests of the foreign state or states

involved, and the mutual interests of the family of nations in just and efficiently

functioning rules of international law.” In re Artimm, S.r.L., 335 B.R. 149, 161

(Bankr. C.D. Cal. 2005). Accordingly, Chapter 15 provides courts with broad,

flexible rules to fashion relief appropriate for effectuating its objectives in

accordance with comity. See In re Bear Stearns High-Grade Structured Credit

Strategies Master Fund, Ltd., 389 B.R. 325, 333-34 (S.D.N.Y. 2008); In re

SPhinX, Ltd., 351 B.R. 103, 112 (Bankr. S.D.N.Y. 2006) (“[C]hapter 15

maintains—and in some respects enhances—the ‘maximum flexibility,’ that

section 304 provided bankruptcy courts . . . in light of principles of international

comity and respect for the laws and judgments of other nations.” (citation

omitted)).

Given Chapter 15’s heavy emphasis on comity, it is not necessary, nor to

be expected, that the relief requested by a foreign representative be identical to,

or available under, United States law. In re Metcalfe & Mansfield Alternative

Investments, 421 B.R. 685, 697 (Bankr. S.D.N.Y. 2010) (“The relief granted in the

foreign proceeding and the relief available in a U.S. proceeding need not be

identical.”); see also Artimm, 335 B.R. at 160 n.11. We have previously cautioned

that the mere fact that a foreign representative requests relief that would be 
Nos. 12-10542, 12-10689, 12-10750

33

available under the law of the foreign proceeding, but not in the United States,

is not grounds for denying comity. See In re Condor, 601 F.3d at 327. 

Nevertheless, Chapter 15 does impose certain requirements and

considerations that act as a brake or limitation on comity, and preclude granting

the relief requested by a foreign representative. In this case, the bankruptcy

court rested on three of Chapter 15’s sections, §§ 1521, 1507, and 1506, each of

which it found precluded the relief Vitro sought. Vitro II, 473 B.R. at 133.

Vitro’s appeal predominantly rests on finding relief under § 1507 and, only in the

alternative, under § 1521. Vitro argues that it would be inappropriate to deny

its request for comity under § 1507, simply because the relief might not meet the

requirements of § 1521. The Objecting Creditors, in turn, argue extensively that

the relief Vitro requests, to the extent it is available at all, must fall under

§ 1521(a)(1) and (b), and that the bankruptcy court was correct to deny

enforcement because of the limitations imposed by § 1522.

Thus, while comity should be an important factor in determining whether

relief will be granted, we are compelled by the bankruptcy court’s decision and

the parties’ arguments to get into the weeds of Chapter 15 to determine whether

a foreign representative may independently seek relief under either § 1521 or

§ 1507, and whether a court may itself determine under which of Chapter 15’s

provision such relief would fall. Both appear to be questions of first impression.

We conclude that a court confronted by this situation should first consider

the specific relief enumerated under § 1521(a) and (b). If the relief is not

explicitly provided for there, a court should then consider whether the requested

relief falls more generally under § 1521’s grant of any appropriate relief. We

understand “appropriate relief” to be relief previously available under Chapter

15’s predecessor, § 304. Only if a court determines that the requested relief was
Nos. 12-10542, 12-10689, 12-10750

23 Although this approach—first considering relief under § 1521(a) and (b) and then

proceeding to § 1507—has not been explicitly mandated in this circuit, this three-step

approach, as we explain below, finds support in the statutory language and in Congress’s

express intent in crafting § 1507.

24 See generally Alesia Ranney-Marinelli, Overview of Chapter 15 Ancillary and Other

Cross-Border Cases, 82 Am. Bankr. L.J. 269, 317 (2008) (“What is not clear is whether a

foreign representative can pick and choose which section to proceed under in order to take

advantage of different standards for affording relief or burdens of proof.”); George W. Shuster,

Jr., The Trust Indenture Act and International Debt Restructurings, 14 Am. Bankr. Inst. L.

Rev. 431, 455 (“Because it is unclear where section 1521 ends and where section 1507 begins,

it is also unclear which of these paths the court will follow—whether it will consider entry of

an order enforcing a foreign discharge as ‘appropriate relief’ under section 1521 or as

‘additional assistance’ under section 1507.”).

34

not formerly available under § 304 should a court consider whether relief would

be appropriate as “additional assistance” under § 1507.23

We start by acknowledging that “[t]he relationship between § 1507 and

§ 1521 is not entirely clear.” In re Toft, 453 B.R. at 190; see also In re Atlas

Shipping A/S, 404 B.R. at 741.24 This leaves litigants uncertain as to which

provision they should rely on for relief. Indeed, Vitro itself acknowledges that

its decision to seek relief under § 1507 and, only in the alternative, § 1521 was

motivated, in part, by the factthat every other foreign representative requesting

enforcement of a concurso plan under Chapter 15 has cited both § 1507 and

§ 1521.

Section 1521(a) empowers a court to “grant any appropriate relief” at the

request of the foreign representative when necessary to “effectuate the purpose

of [Chapter 15] and to protect the assets of the debtor or the interests of the

creditors.” 11 U.S.C. § 1521(a). In addition, § 1521 lists a series of non-exclusive

forms of relief. These include:

(1) staying the commencement or continuation of an

individual action or proceeding concerning the debtor’s

assets, rights, obligations or liabilities to the extent

they have not been stayed under section 1520(a); 
Nos. 12-10542, 12-10689, 12-10750

35

(2) staying execution against the debtor’s assets to the

extent it has not been stayed under section 1520(a); 

(3) suspending the right to transfer, encumber or

otherwise dispose of any assets of the debtor to the

extent this right has not been suspended under section

1520(a); 

(4) providing for the examination of witnesses, the

taking of evidence or the delivery of information

concerning the debtor’s assets, affairs, rights,

obligations or liabilities; 

(5) entrusting the administration or realization of all or

part of the debtor’s assets within the territorial

jurisdiction of the United States to the foreign

representative or another person, including an

examiner, authorized by the court; 

(6) extending relief granted under section 1519(a); and

(7) granting any additional relief that may be available

to a trustee, except for relief available under sections

522, 544, 545, 547, 548, 550, and 724(a). 

11 U.S.C. § 1521(a).

Additionally, under § 1521(b), “the court may, atthe request of the foreign

representative, entrust the distribution of all or part of the debtor’s assets

located in the United States to the foreign representative . . . provided that the

court is satisfied that the interests of creditors in the United States are

sufficiently protected.” Section 1522 provides an important limiting factor: relief

under § 1521 may be granted “only if the interests of the creditors and other

interested entities, including the debtor, are sufficiently protected,” and a court

may impose appropriate conditions on relief. 11 U.S.C. § 1522(a)-(b).

Unlike § 1521’s “any appropriate relief” language, § 1507 gives courts the

authority to provide “additional assistance.” Section 1507 “was added to the

Bankruptcy Code because Congress recognized that Chapter 15 may not

anticipate all of the types of relief that a foreign representative may require and
Nos. 12-10542, 12-10689, 12-10750

25 The Model Law’s analog to § 1507 “was designed to insure access to relief that might

be available under law other than the insolvency law.” 8 Collier, supra, ¶ 1507.01.

26 These factors are identical to those formerly found under § 304(c), with the exception

that comity has been elevated from a factor to the introductory text. 

27 Because of § 1521’s broad reach, § 1507’s scope is uncertain. See Lesley Salafia,

Cross-Border Insolvency Law in the United States and Its Application to Multinational

Corporate Groups, 21 Conn. J. Int’l L. 297, 322 (2006) (section 1507 “might not have been

necessary,” given expansive relief available under other parts of Chapter 15); 8 Collier, supra,

¶ 1507.01 (“In light ofthis display of [§ 1521’s] weaponry, it is not clear what section 1507 adds

to the arsenal.”). Scholarly commentary has speculated that § 1507 was merely intended to

36

which would otherwise be available to such foreign representative.” 8 Collier on

Bankruptcy ¶ 1507.01 (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2012)

(Collier).25 A court determining whether to provide additional assistance under

§ 1507 considers the factors listed under subsection (b),26 which provides that:

(b) In determining whether to provide additional

assistance under this title or under other laws of

the United States, the court shall consider

whether such additional assistance, consistent

with principles of comity, will reasonably assure

1) just treatment of all holders of claims

against or interests in the debtor’s

property;

2) protection of claim holders in the United

States against prejudice and inconvenience

in the processing of claims in such foreign

proceeding;

3) prevention of preferential or fraudulent

dispositions of property of the debtor;

4) distribution of proceeds of the debtor’s

property substantially in accordance with

the order prescribed by this title; and 

5) if appropriate, the provision of an

opportunity for a fresh start for the

individual that such foreign proceeding

concerns.

11 U.S.C. § 1507(b).27
Nos. 12-10542, 12-10689, 12-10750

incorporate § 304’s jurisprudence. 8 Collier, supra, ¶ 1507.01. Further muddying § 1507’s role

is that, although § 304(c)’s factors are included under § 1507, a court may nevertheless

consider those factors under § 1521. “It would be anomalous to suggest that in determining

whether creditor interests are sufficiently protected for purposes of . . . [§] 1521, a court could

not consider evidence of procedural or substantive prejudice to non-domestic creditors in the

foreign proceeding or a significant deviation between the distribution scheme in the foreign

proceeding and the distribution scheme prescribed by the Code.” Paul L. Lee, Ancillary

Proceedings under Section 304 and Proposed Chapter 15 of the Bankruptcy Code, 76 Am.

Bankr. L.J. 115, 193 (2002).

37

We are thus faced with two statutory provisions that each provide

expansive relief, but under different standards. To clarify our resolution of

requests for relief under Chapter 15 we adopt the following framework for

analyzing such requests. 

First, because § 1521 lists specific forms of relief, a court should initially

consider whether the relief requested falls under one ofthese explicit provisions.

In re Read, 692 F.3d 1185, 1191 (11th Cir. 2012) (specific terms prevail over the

general (quoting D. Ginsberg & Sons, Inc. v. Popkin, 285 U.S. 204, 208 (1932));

see also 1 Collier, supra, ¶ 13.07[2]; Ranney-Marinelli, Overview, supra, at 317

(arguable that foreign representatives should be bound by those provisions

specifically providing the relief sought). Other courts have held that, where the

requested relief is explicitly provided for under § 1521, it is unnecessary to

consider § 1507. In re Atlas Shipping A/S, 404 B.R. at 740 (“Whatever the outer

bounds of discretionary relief chapter 15 allows, this case does not push the

boundaries. The relief sought by the foreign representative is expressly provided

for in §§ 1521(a)(5) and 1521(b). The Court need not venture into the area of

‘additional assistance,’ ‘consistent with principles of comity’ under § 1507.”); In

re Int’l Banking Corp. B.S.C., 439 B.R. 614, 626 n.10 (Bankr. S.D.N.Y. 2010).

Second, if § 1521(a)(1)-(7) and (b) does not list the requested relief, a court

should decide whether it can be considered “appropriate relief” under § 1521(a).

This, in turn, requires consideration of whether such relief has previously been

provided under § 304. See In re Condor, 601 F.3d at 329 (observing that
Nos. 12-10542, 12-10689, 12-10750

38

avoidance actions under foreign law were permitted under § 304 and reading

§ 1521(a)(7) to permit such relief). This latter consideration aligns with

Congress’s intent that § 1521 was not intended to “expand or reduce the scope

of relief” previously available under other provisions, including § 304. H.R. Rep.

No. 109-31, pt. 1, at 116. A court should also consider whether the requested

relief would otherwise be available in the United States. Cf. Artimm, 335 B.R.

at 160 n.11 (section 1507 authorizes relief beyond that provided for in

Bankruptcy Code or United States law). 

Third, only if the requested relief appears to go beyond the relief

previously available under § 304 or currently provided for under United States

law, Artimm, 335 B.R. at 160 n.11, should a court consider § 1507. See H.R. Rep.

No. 109-31, pt. 1, at 109 (“Subsection (2) [of § 1507] makes the authority for

additional relief (beyond that permitted under section[ ] . . . 1521, below) subject

to the conditions for relief heretofore specified in United States law under

section 304 . . . .” (emphasis added)). This approach recognizes that relief under

§ 1507 “is in nature more extraordinary” than that provided under § 1521, as a

result of which “the test for granting that relief is more rigorous.” Leif M.

Clark, Chapter 15 Bankruptcy Strategies: Leading Bankruptcy Experts on

Understanding the Filing Process and Achieving Successful Outcomes in CrossBorder Insolvency Cases—Advice for Handling Cross-Border Bankruptcy Cases

Effectively (Aspatore Sept. 2012), available at 2012 WL 3279175, at *10. It also

acknowledges that, while § 1507’s broad grant of assistance is intended to be a

“catch-all,” it cannot be used to circumvent restrictions present in other parts of

Chapter 15, nor to provide relief otherwise available under other provisions. In

re Int’l Banking Corp. B.S.C., 439 B.R. at 626 n.10; 1 Collier, supra, ¶ 13.07[2]

n.34 (section 1507 should not be used “to eviscerate limitations placed within

chapter 15 itself”). 
Nos. 12-10542, 12-10689, 12-10750

39

We believe this framework provides foreign representatives with the

clearest path by which to seek Chapter 15 relief. See Clark, supra, at *10

(advising attorneys to consult § 1507 if the relief under § 1521 is insufficiently

broad). This framework also conforms to Congress’s intent that courts should

not deny Chapter 15 relief for failure to meet the requirements of § 1507, which,

in any case, “is not to be the basis for denying or limiting relief otherwise

available under this chapter.” H.R. Rep. No. 109-31, pt. 1, at 109; see also

Ranney-Marinelli, Overview, supra, at 316 n.267. Under this framework, courts

will also “not construe the range of relief under § 1507 to be bound by the same

limitations that apply in § 1521,” with the exception of those limitations

specifically provided for. Clark & Goldstein, Sacred Cows, supra, at 529. 

At the same time, this approach means that, by first considering § 1521

relief—which we deem co-extensive with that previously available under

§ 304—courts begin their analysis in familiar territory. Ranney-Marinelli,

Overview, supra, at 317 n.274 (noting that, compared to other sections, § 1507’s

standard of proof is unclear). This prevents all-encompassing applications of

§ 1507 and avoids prematurely expanding the reach of Chapter 15 beyond

current international insolvency law. H.R. Rep. Rep. No. 109-31, pt. 1, at 109

(purpose of § 1507 is “to permit the further development of international

cooperation begun under section 304”); Clark & Goldstein, Sacred Cows, supra,

at 529 (whether a “court [would] ever dare to employ § 1507 as a substitute for

(or worse, an end-around of) § 1521” is an open question).

3. Availability of Relief under § 1521 and § 1507

Applying our analytic framework to Vitro’s request for relief, the

bankruptcy court did not err in denying relief. Sections 1521(a)(1)-(7) and (b) do

not provide for discharging obligations held by non-debtor guarantors. Section

1521(a)’s general grant of “any appropriate relief” also does not provide the

necessary relief because our precedent has interpreted the Bankruptcy Code to
Nos. 12-10542, 12-10689, 12-10750

28 Vitro also argues that § 1521 only applies during the pendency of a foreign insolvency

proceeding, and not after the foreign court approves a reorganization plan, and Vitro cites in

support In re Daewoo Logistics Corp., 461 B.R. 175, 179-80 (Bankr. S.D.N.Y. 2011). That case

only states that “relief may be available after close of the foreign proceeding under section

1507.” Id. at 180. It does not create a categorical rule and § 1521 does not include such a

limitation.

40

foreclose such a release, and because when such relief has been granted, it has

been granted under § 1507, not § 1521. Even if the relief sought were

theoretically available under § 1521, the facts of this case run afoul of the

limitations in § 1522. Finally, although we believe the relief requested may

theoretically be available under § 1507 generally, Vitro has not demonstrated

circumstances comparable to those that would make possible such a release in

the United States, as contemplated by § 1507(b)(4).

(a) Step 1: Section 1521’s enumerated provisions

The bankruptcy court denied relief under § 1521(b) and § 1522(a),

observing that“[o]ne could argue that Vitro SAB, as a holding company, is trying

to achieve, through its Concurso plan, an entrustment of the distribution of the

assets of its non-debtor U.S. subsidiaries without sufficiently protecting the

Objecting Creditors.” Vitro II, 473 B.R. at 132. Vitro concedes that § 1507, on

which it primarily relies, does not explicitly provide for a “discharge” of nondebtors, and thus injunctive relief is a necessary by-product of granting

enforcement, but Vitro argues that this fact alone does not mean that it must

satisfy the requirements of § 1522.28 The Objecting Creditors respond that the

relief Vitro seeks is addressed by § 1521(a)(1) and (b), and thus Vitro is bound

by the limitations in § 1521 and § 1522 that any relief must ensure that the

interests of creditors and other interested parties are sufficiently protected.

Contrary to the Objecting Creditors’ assertion and the bankruptcy court’s

finding, the requested relief is not available under any of § 1521’s specific

provisions because none of the types of relief enumerated under § 1521(a) or §

1521(b) matches the type of relief Vitro seeks. The closest provision is
Nos. 12-10542, 12-10689, 12-10750

29 Scholarly commentary has suggested that § 1521(a)(1)’s use of the word “concerns”

“indicates that a stay of actions against someone other than the debtor or the debtor’s assets

is a possibility,”including “a stay of litigation against a third party with indemnification rights

against the debtor, or with shared liability . . . on the theory that the litigation so stayed

concerns the debtor’s rights, obligations or liabilities.” 1 Collier, supra, ¶ 13.07[2] & n.37

(emphasis in original). However, the situation in this case is different. The worry is not that

Vitro will be harmed by creditors collecting from the subsidiaries who will in turn come looking

for Vitro. Instead, Vitro’s subsidiaries are guarantors, and thus it was Vitro’s defaulting on

its obligations which now endangers the subsidiaries by triggering the guaranties.

30 We are aware that under the older § 304(b)(1) a bankruptcy court could “enjoin

actions against the debtor with regard to property involved in such foreign proceeding” and

that “against the debtor” has been understood to include non-debtors “when failure to enjoin

the action would jeopardize the success of the bankruptcy process or cause irreparable harm

to the debtor’s estate and its creditors.” In re Schimmelpenninck, 183 F.3d at 362 (internal

quotation marks and citation omitted). However, under 11 U.S.C. § 362(a)(1), which includes

the same “against the debtor” language as § 304(b), stays against non-debtors were reserved

for “very limited situations.” Matter of S.I. Acquisition, Inc., 817 F.2d 1142, 1147 (5th Cir.

1987). Moreover, unlike in a case such as In re Schimmelpenninck, we are not dealing with

creditors attempting to recover on a debt under an alter ego and single business enterprise

theory. 183 F.3d at 363. Instead, the Objecting Creditors are trying to recover from the

subsidiaries under guaranties that were triggered only as a result of Vitro’s default. Vitro is

not seeking a temporary injunction, but a permanent discharge ofthe Guarantors’ obligations.

41

§ 1521(a)(1), which provides for “staying the commencement or continuation of

an individual action or proceeding concerning the debtor’s assets, rights,

obligations or liabilities.” 11 U.S.C. § 1521(a)(1) (emphasis added).29 But Vitro

is not merely seeking a stay. Rather, Vitro seeks to permanently enjoin actions

brought against its subsidiaries and, moreover, to discharge obligations and

liabilities owed by those subsidiaries. We reject the bankruptcy court’s

suggestion to treat the assets of Vitro’s subsidiaries as Vitro’s “assets” for this

purpose. In re Guyana Dev. Corp., 168 B.R. 892, 905 (Bankr. S.D. Tex. 1994)

(“As a general rule, property of the estate includes the debtor’s stock in a

subsidiary but not the assets of the subsidiary.”). As the Objecting Creditors

repeatedly remind us, most of Vitro’s subsidiaries have not gone into

bankruptcy. Vitro’s subsidiaries are also its creditors. Thus, there is no basis

to conclude that § 1521(a)(1) adequately responds to the type of relief Vitro

seeks.30
Nos. 12-10542, 12-10689, 12-10750

Vitro itself points out that injunctive relief is only incidental to the broader relief it seeks.

31 We also note that the Enforcement Motion does not seek relief under § 1521(b).

Instead,the Enforcement Motion refers to § 1521(a)(1), (a)(2), (a)(5), and (a)(7). Neither Vitro’s

nor Fintech’s brief argues how these other provisions would apply and they actually appear to

present reasons for why the requested relief might not be available under § 1521.

42

For substantially the same reason, we reject the bankruptcy court’s

suggestion that § 1521(b) applies. Section 1521(b) provides that “the court may,

atthe request ofthe foreign representative, entrustthe distribution of all or part

of the debtor’s assets located in the United States to the foreign representative

. . . provided that the court is satisfied that the interests of creditors in the

United States are sufficiently protected.” Because the subsidiaries’ assets are

not Vitro’s, § 1521(b) does not apply.31

(b) Step 2: Section 1521(a)’s grant of “any appropriate relief”

Having determined that none of the enumerated forms of relief listed

under § 1521 provides the range of relief Vitro seeks, we proceed to consider

whether the relief sought fits into the court’s more general power to grant “any

appropriate relief.” We conclude that the requested relief falls outside

§ 1521(a)’s grant of authority for two reasons. 

First, the relief Vitro seeks, a non-consensual, non-debtor release through

a bankruptcy proceeding, is generally not available under United States law.

Indeed, this court has explicitly prohibited such relief. In re Pac. Lumber Co.,

584 F.3d 229, 251-52 (5th Cir. 2009) (discharge of debtor’s debt does not affect

liability of other entities on such debt and denying non-debtor release and

permanent injunction); In re Zale Corp., 62 F.3d 746, 760 (5th Cir. 1995)

(“Section 524 prohibits the discharge of debts of nondebtors.”). Because our law

prohibits the requested discharge, a request for such relief more properly falls

under § 1507, which was included to address such circumstances.

Second, our conclusion is bolstered by the fact that in the one case where

a foreign proceeding’s non-debtor discharge was approved by a United States
Nos. 12-10542, 12-10689, 12-10750

32 While we agree with the bankruptcy courtthatMetcalfe isultimately distinguishable,

Vitro II, 473 B.R. at 131, we nevertheless find it instructive in determining which part of

Chapter 15 would provide the requested relief.

43

court, it was under § 1507, not § 1521. In Metcalfe, the court recognized that “a

third-party non-debtor release ‘is proper only in rare cases.’” 421 B.R. 685, 694

(Bankr. S.D.N.Y. 2010) (quoting In re Metromedia Fiber Network, Inc., 416 F.3d

136, 141 (2d Cir. 2005)). The court nevertheless found that approval was not

precluded under § 1507. Id. at 697.32

Finally, we note that the bankruptcy court’s decision was proper under

§ 1522, which requires that the relief contemplated under § 1521 balance the

interests of the creditors and debtors. See In re Tri-Cont’l Exch. Ltd., 349 B.R.

at 637 (analysis of § 1522 “emphasize[s] the need to tailor relief and conditions

so as to balance the relief granted to the foreign representative and the interests

of those affected by such relief, without unduly favoring one group of creditors

over another”). Because the bankruptcy court also found thatthe Concurso plan

did not provide for an appropriate balance among the interests of Vitro, its

creditors, and the Guarantors under § 1521 and § 1522, we observe that even

were we to agree that the requested relief is provided for under § 1521, the

bankruptcy court did not abuse its discretion in denying it. Because the reasons

for which the bankruptcy court denied relief under § 1521 are largely identical,

however, we jointly address those reasons under our discussion of § 1507. We

proceed to consider whether, as Vitro and Fintech argue,the relief was available

under § 1507, and whether the bankruptcy court properly denied it.

(c) Step Three: Section 1507’s “additional assistance”

The bankruptcy court denied relief under § 1507 because the Plan “does

not provide for the distribution of proceeds ofthe debtor’s property substantially

in accordance with the order prescribed by Title 11,” contrary to § 1507(b)(4).

Vitro II, 473 B.R. at 132.
Nos. 12-10542, 12-10689, 12-10750

44

Under a Chapter 11 plan,the noteholders would receive

their distribution from the debtor and would be free to

pursue their other obligors, in this case the non-debtor

guarantors. The Concurso plan provides drastically

different treatment in that the noteholders receive a

fraction ofthe amounts owed under the indentures from

Vitro SAB and their rights against the other obligors

are cut off.

Id.

Vitro challenges the bankruptcy court’s holding predominantly on the

ground that it accorded insufficient weight to comity. The Objecting Creditors

point to disparities between the Concurso plan and a similar proceeding in

United States bankruptcy court. They also assert that the Mexican court’s

disregard for a relevant decision in New York state court precludes extending

comity to its decision.

We conclude that § 1507 theoretically provides for the relief Vitro seeks

because it was intended to provide relief not otherwise available under United

States law. But the devil is in the details, and in this case, the bankruptcy court

correctly determined that relief was precluded by § 1507(b)(4). Under that

provision,the bankruptcy court had to consider whether the relief requested was

comparable to that available under the Bankruptcy Code. We conclude below

that, although a non-consensual, non-debtor discharge would not be available in

this circuit, it could be available in other circuits. We also hold that because

Vitro has failed to show the presence of the kind of comparable extraordinary

circumstances that would make enforcement of such a plan possible in the

United States, the bankruptcy court did not abuse its discretion in denying

relief.
Nos. 12-10542, 12-10689, 12-10750

45

i. Availability of non-consensual, non-debtor discharges

under § 1507

This court has previously foreclosed the type of relief sought here in the

context of a United States bankruptcy proceeding. We acknowledge, however,

that our view on this subject is not universally shared by our sister circuits.

Although § 1521 relief is precluded by our prior holdings, relief may nevertheless

be appropriate under § 1507 which, as discussed above, was included under

Chapter 15 to permit the expansion of relief previously available under § 304.

We begin by analyzing release of nondebtors under United States bankruptcy

law.

In re Pacific Lumber Co. concerned a proposed plan that would “release[]

[owners and guarantors] from liability . . . related to proposing, implementing,

and administering the [reorganization] plan.” 584 F.3d at 251. Quoting 11

U.S.C. § 524(e)’s language that the “discharge of a debt of the debtor does not

affect the liability of any other entity on . . . such debt,” we went on to reject the

guarantors’ argument that “the release clause is part of their bargain because

without the clause neither company would have been willing to provide the

plan’s financing.” Id. at 251-52 (quotation marks omitted). This conclusion was

consistent with prior rulings from this circuit that “seem broadly to foreclose

non-consensual non-debtor releases and permanent injunctions.” Id. at 252; see

also In re Bigler LP, 442 B.R. 537, 546 (Bankr. S.D. Tex. 2010); In re Pilgrim’s

Pride Corp., No. 08-45664-DML-11, 2010 WL 200000, at *5 (Bankr. N.D. Tex.

Jan. 14, 2010). 

Other circuits agree. See In re Lowenschuss, 67 F.3d 1394, 1401 (9th Cir.

1995) (“This court has repeatedly held, without exception, that § 524(e) precludes

bankruptcy courts from discharging the liabilities of non-debtors.”); In re W. Real

Estate Fund, Inc., 922 F.2d 592, 600-02 (10th Cir. 1990); In re Jet Fla. Sys., Inc.,

883 F.2d 970, 972-73 (11th Cir. 1989). Those circuits not in agreement
Nos. 12-10542, 12-10689, 12-10750

46

nevertheless prohibit such releases in all but the rarest of cases. 

In Metromedia, for example, the court expressed great reluctance in

approving non-debtor releases. 416 F.3d at 141. It observed that the

Bankruptcy Code expressly authorizes such releases only under 11 U.S.C.

§ 524(g), a provision authorizing such release upon satisfaction of specific

conditions in the context of asbestos cases. Id. at 142. That court also noted

that the release of non-debtors “is a device that lends itself to abuse” because it

“may operate as a bankruptcy discharge arranged without a filing and without

the safeguards of the [Bankruptcy] Code.” Id. “No case has tolerated nondebtor

releases absent the finding of circumstances that may be characterized as

unique,” and such releases have been appropriate only in “rare cases.” Id. at

141-42. The Metromedia court elaborated that “[a] nondebtor release in a plan

of reorganization should not be approved absent the finding that truly unusual

circumstances render the release terms important to success of the plan,”

focusing on considerations such as whether: “the estate received substantial

consideration . . .; the enjoined claims were channeled to a settlement fund

rather than extinguished . . .; the enjoined claims would indirectly impact the

debtor’s reorganization by way of indemnity or contribution . . . . and the plan

otherwise provided for the full payment of the enjoined claims . . . . [or] the

affected creditors consent[ed].” Id. at 142-43 (internal citations and quotation

marks omitted).

Similarly, in In re Dow Corning Corp., the court observed that enjoining

a non-consenting creditor’s claim against a non-debtor is a “dramatic measure”

and instructed courts to approve such a release only when the following seven

factors are present:

(1) There is an identity of interests between the debtor

and the third party, usually an indemnity relationship,

such that a suit against the non-debtor is, in essence, a

suit against the debtor or will deplete the assets of the
Nos. 12-10542, 12-10689, 12-10750

47

estate; (2) The non-debtor has contributed substantial

assets to the reorganization; (3) The injunction is

essential to reorganization, namely the reorganization

hinges on the debtor being free from indirect suits

against parties who would have indemnity or

contribution claims against the debtor; (4) The

impacted class, or classes, has overwhelmingly voted to

accept the plan; (5) The plan provides a mechanism to

pay for all, or substantially all, of the class or classes

affected by the injunction; (6) The plan provides an

opportunity for those claimants who choose notto settle

to recover in full and; (7) The bankruptcy court made a

record of specific factual findings that support its

conclusions.

280 F.3d 648, 658-61 (6th Cir. 2002).

Other courts have imposed similar restrictions on enjoining third-party

claims against non-debtors. See In re Specialty Equip. Cos., 3 F.3d 1043, 1044-

49 (7th Cir. 1993) (section 524(e) does not bar granting release to third parties

where release is consensual and non-coercive and would bind only those

creditors voting in favor of the plan); In re A.H. Robins Co., Inc., 880 F.2d 694,

701-02 (4th Cir. 1989) (enjoining suits where plan was overwhelmingly

approved, late claimants were given opportunity to recover, reorganization

hinged on debtor being free from claims against parties with indemnity or

contribution claims againstit, and creditors who opted out would have had their

claims fully satisfied by staying within settlement agreement).

The decisions ofthese courts demonstrate disagreement among the circuits

as to when, if ever, a non-debtor discharge is appropriate. We conclude that,

although our court has firmly pronounced its opposition to such releases, relief

is not thereby precluded under § 1507, which was intended to provide relief not

otherwise available under the Bankruptcy Code or United States law. See

Artimm, 335 B.R. at 160 n.11.
Nos. 12-10542, 12-10689, 12-10750

33 Vitro also argues that the bankruptcy court erred in treating § 1507(b)’s subsections

as prongs of a test, as opposed to mere considerations, and did not consider the totality of the

circumstances. Although it is not necessary for a plan to meet all § 1507(b) factors, see In re

Bd. of Dirs. of Telecom Arg. S.A., 528 F.3d 162, 169 n.7 (2d Cir. 2008) (noting that “Chapter

15 dispenses withthe explicit requirementthat courts consider the five factors listed in § 304(c)

[now § 1507(b)] as part of an application for recognition of foreign insolvency proceedings”),

failure to meet any one of these can suffice to deny enforcement, see In re Treco, 240 F.3d at

158-61 (denying enforcement because of violation of § 304(c)(4) (now § 1507(b)(4)).

34 Fintech also argues that failure to enforce the Plan would encourage investors to

resortto litigation, instead of negotiating compromises with a debtor in bankruptcy. Given our

very limited holding on the facts of this case we find this to be a slight risk. Even were it

otherwise, we are bound to apply the statutory provisions of Chapter 15 faithfully irrespective

of whether the effect will be to spur further litigation.

35 The parties dispute whether we need to consider the traditional factors of comity. In

International Transactions, Ltd. we enumerated five requirements that would make a foreign

48

ii. Appropriateness of non-consensual, non-debtor

discharges under § 1507

Having determined that the relief Vitro seeks is theoretically available

under § 1507, we turn to whether the bankruptcy court abused its discretion in

determining that such relief was not appropriate in this case. The bankruptcy

court held a four-day trial, involving hundreds of exhibits and testimony by

witnesses from both sides. It concluded that the requested relief did not

substantially conform to the order of distribution under Title 11 because the

Concurso plan provided creditors with a substantially reduced recovery, while

cutting off their ability to pursue relief against the Guarantors.

Vitro contends that the bankruptcy court incorrectly denied enforcement

because the Concurso plan did not provide creditors with exactly what they

would have received under Chapter 11.33 Vitro further challenges the

applicability of § 1507(b)(4) because the bankruptcy court based its decision on

the discharge of non-debtors’ obligations, and not the distribution of Vitro’s

property. Finally, Vitro argues that whatever concerns this case implicates, the

bankruptcy court erred in concluding that they outweighed the interests of

comity.34, 35
Nos. 12-10542, 12-10689, 12-10750

court’s judgment on a matter conclusive in federal court. 347 F.3d at 594. Section 1507

explicitly incorporates comity, however, and thus, given our reasoning above, we assume that

comity would be granted were the Plan to also reasonably address the concerns enumerated

in § 1507(b)(1)-(4). See In re Treco, 240 F.3d at 158 (observing that § 304(c) (now § 1507(b))

supplants federal common law analysis). 

36 The Objecting Creditors’ briefs largely omit any discussion of how the distributions

under the Concurso plan, including the New 2019 Notes, the MCDs, and the cash

consideration, resulted in this amount. The Objecting Creditors’ witness, Dan Gropper, a

managing director of one of the Noteholders, testified as a fact witness on this issue. Gropper

was uncertain of what worth, for example, the MCDs, which convert into 20% equity in Vitro

upon Vitro’s default, would have, given the questionable value of equity in a defaulting

company. The bankruptcy court made no specific factual findings in his regard, and thus we

are left with the court’s more general observation that creditors would, under the Plan, receive

a fraction of what they would have received under the Old Notes.

The Objecting Creditors also make much of testimony by their expert witness, Dr.

Joseph W. Doherty, that there was only a 10,000 to 1 chance that Vitro would have received

a distribution in United States bankruptcy court like that resulting from the concurso

proceeding. But this calculation was not based on any case-by-case comparison between Vitro

and other bankruptcies. Instead, it was based on a sample of cases drawn from an incomplete

database of bankruptcy proceedings, which, atthe time, contained 108 relevant cases, of which

37 involved any distributions of equity. Doherty himself admitted that the database was still

in the process of being compiled and presently contained only cases with information easily

available on the Public Access to Court Electronic Records database (“PACER”). Statistical

evidence of this variety is, to say the least, of limited value when considering the complexities

of bankruptcy proceedings of this scale. The bankruptcy court acknowledged that Doherty

testified as to “[t]he wide variance in return to creditors from what would be expected in a

Chapter 11 plan,” but only foundthattestimony “credible,” without making any specific factual

findings, and only made his credibility finding within the scope of arguments the court did not

reach.

49

The Objecting Creditors respond that the evidence presented at trial

demonstrated that, under the Concurso plan, they would recover only around

40% of the Old Notes’ value, while Vitro’s shareholders would retain equity

interests worth $500 million.36 They also point to various parts of the Plan that

do not conform with Chapter 11. These include that guarantor obligations

cannot be discharged over the objections of creditors, creditors would not have

been grouped for voting purposes into a single class together with parties having

adverse interests, and insider votes would not count towards the Plan’s approval.

The Objecting Creditors further argue that comity does not weigh in favor of

enforcement of this plan because the Mexican court, which approved it, ignored
Nos. 12-10542, 12-10689, 12-10750

37 We found the discussion on this issue in the amicus curiae brief filed by the United

Mexican States of assistance.

50

a ruling by a New York state court holding that the indentures expressly

prohibited modification of the Guarantors’ obligations.

We conclude thatthe evidence Vitro presented at trial does not support the

presence of circumstances comparable to those necessary for effectuating the

release of non-debtor guarantors in those of our sister circuits that allow such

a release. See In re Schimmelpenninck, 183 F.3d at 364.

We begin our analysis, as we must, by considering comity. 11 U.S.C.

§ 1507 (court may grant “additional assistance . . . consistent with principles of

comity”). In revising Chapter 15’s predecessor, § 304, Congress elevated comity

from a factor under § 304(c) to the introductory text of § 1507 “to make it clear

that it is the central concept to be addressed.” H.R. Rep. No. 109-31, pt. 1, at

109. Vitro is thus correct to focus its argument on comity, and we agree with

Vitro that comity is the rule under Chapter 15, not the exception. It is thus

necessary to first address the Objecting Creditors’ most direct challenge to that

principle, namely that the Mexican court failed to extend comity to the decision

of a New York state court on issues central to this case. See United States ex rel.

Saroop v. Garcia, 109 F.3d 165, 170 (3d Cir. 1997) (reciprocity is condition for

honoring foreign country’s judicial decrees); Remington Rand Corp.-Del. v. Bus.

Sys. Inc., 830 F.2d 1260, 1273 (3d Cir. 1987) (describing comity as a “two-way

street”).37

The New York state court addressed a declaratory judgment action

brought by Wilmington, which sought a confirmation of Vitro’s obligations under

the indentures. Wilmington Trust, 2011 WL 6141025, at *1. The state court

carefully parsed the issues before it and determined that “any declaratory relief

in this court can only be in the context of determining the rights and obligation

of the parties under the Indentures.” Id. at *5. The court next determined that
Nos. 12-10542, 12-10689, 12-10750

51

the indentures were governed by New York law and that “pursuant to the

relevant provisions of the Indentures . . . any non-consensual . . . release,

discharge or modification of the Guarantors’ obligations is prohibited.” Id. The

court was clear, however, that its authority went no further. “Whether such

rights and obligations can or cannot be novated, substituted, released or

modified under the Mexican bankruptcy law is an issue for the Mexican Court.”

Id. To remove all doubt, the court explicitly stated that “granting a declaratory

judgment in favor of [the Objecting Creditors], to the extent stated herein, will

notinterfere with the Mexican Court proceeding, which is the proper jurisdiction

to determine the issues that may arise in connection with the approval of the

Concurso Plan, pursuant to applicable Mexican law.” Id. The court concluded

by stating that “whether any Concurso Plan that is ultimately approved by the

Mexican Court may be enforced in the United States is an issue for the federal

courts, including the Bankruptcy Court.” Id.

The Mexican court was presented with the opportunity to consider the

New York decision and its impact on the concurso proceeding. Although the

Mexican court does not appear to have provided specific reasons, we infer from

its decision that it did not find that the indentures precluded Mexican law from

novating the obligations contained therein. Because the New York court

explicitly set aside this issue for the Mexican court, reciprocity was not offended

by the Mexican court’s subsequent decision of that very issue. We thus do not

view this as a ground for denying comity. Our decision comports with the

approach adopted by the courtin Metcalfe, which, while recognizing that a thirdparty non-debtor release might be inappropriate under United States law, left

itto the Canadian courts to determine whether they had the jurisdiction to grant

such relief. 421 B.R. at 697-700.
Nos. 12-10542, 12-10689, 12-10750

38 Because the bankruptcy court did not discuss whether § 1507(b)(1)-(3) weighed in

favor of, or against, granting relief, and because we find that relief was properly denied on

other grounds, we do not reach the Objecting Creditors’ argument that the Concurso plan

violated § 1507(b)’s other subsections.

52

We next consider whether the bankruptcy court erred in basing its

decision on § 1507(b)(4).38 Section 1507(b)(4) provides that a court should

consider whether to grant additional assistance to a foreign representative by

considering the “distribution of proceeds of the debtor’s property substantially

in accordance with the order prescribed by this title.” Vitro asserts that the

bankruptcy court’s opinion was based on the distribution of non-debtor’s

property, that of Vitro’s subsidiaries, and thus § 1507(b)(4) is inapplicable. But

the focus of § 1507(b)(4) is on the plan of distribution, and Vitro ignores that the

Plan it seeks to enforce premises distribution of its assets on the discharge of

obligations owed by non-debtors who are also Vitro’s creditors. The respective

amounts that Vitro pays under the Plan to the Objecting Creditors and to its

subsidiaries are inescapably dependent on the discharge of the non-debtor

Guarantors. That the detriment of this distribution falls on the Objecting

Creditors, whose rights are extinguished in exchange for their distribution under

the Plan, in no way subtracts from the fact that the release affects how the

proceeds of Vitro’s property are distributed.

We turn finally to whether the evidence Vitro has presented in favor of

comity and enforcement so outweighed the bankruptcy court’s concerns under

§ 1507(b)(4) that it was an abuse of discretion for the bankruptcy court to deny

relief. Vitro’s primary witness was its foreign representative, Sanchez-Mujica.

He testified that the conciliador persuaded Vitro to offer more favorable terms

to third-party creditors in the Concurso plan. These included a 5%

increase—from 15% to 20%—ofthe equity available on default under the MCDs,

and that consent payments, previously made to only some of the creditors, be

extended to all consenting creditors. But this hardly shows that the result of the
Nos. 12-10542, 12-10689, 12-10750

39 Mejan’s rebuttal report also seeks to undermine the Objecting Creditors’ claim that

there is a debate in the Mexican legal community as to whether insiders are allowed to vote.

53

concurso proceeding is in line with what would be available under Chapter 11,

much less that this case features the unique circumstances that would warrant

a general release of the non-debtor subsidiaries. Sanchez-Mujica also testified

that over 74% of recognized creditors approved the plan. But this ignores that

recognized creditors holding over 50% of all unsecured debt who voted in favor

of the Plan were Vitro subsidiaries.

Vitro’s second witness, Luis Mejan—an expert in Mexican bankruptcy

law—was cross-examined at trial, and his expert report and expert rebuttal were

introduced in lieu of direct examination. Mejan’s expert report provides a

comprehensive breakdown of the LCM and how it operates in the concurso

context. This merely establishes, however, that the LCM is a process

comparable to that ofthe United States, a fact which no party seriously disputes.

The bankruptcy court also had to consider whether the results yielded under the

LCM, on the facts of this case, were comparable to the resultlikely in the United

States. See In re Treco, 240 F.3d at 159 (“A court must consider the effect of the

difference in the law on the creditor in light of the particular facts presented.”);

In re Sivec SRL, 476 B.R. at 324 (“The fact that priority rules and treatment of

claims may not be identical is insufficient to deny a request for comity. What

this Court must consider is the effect of that difference on the creditor in light

ofthe existing facts.”). Mejan’s expert report extensively describes Mexican law,

but does not explain how the results achieved in this case would compare to

those in a United States bankruptcy proceeding. When asked if he had

considered “whether other plans that had been approved or enforced in the

United States were comparable to Vitro in terms of what happened in the

Mexican proceedings,” Mejan conceded that he “did not conduct a specific search

in order to make [that] comparison.”39 This failure is especially troubling given
Nos. 12-10542, 12-10689, 12-10750

Regardless of whether such a debate exists, or whether the LCM permits it or not, it is surely

the case that in the United States insider voters cannotthemselves push through a plan where

there is a class of dissenting creditors. See CIBC Bank & Trust Co. (Cayman) Ltd. v. Banco

Cent. do Brasil, 886 F. Supp. 1105, 1114 (S.D.N.Y. 1995) (citing 11 U.S.C. § 1129(a)(10))

(Bankruptcy Code “prevents ‘insiders’ from voting on whether a reorganization plan will be

accepted by a class of impaired creditors”). As we have explained previously, the Bankruptcy

Code requires that at least one impaired class of creditors approve a plan, where the class is

made up of claims that are substantially similar or share the impaired creditors’ interests. In

re Save Our Springs (S.O.S.) Alliance, Inc., 632 F.3d 168, 174 (5th Cir. 2011).

40 Vitro also called as a rebuttal witness Claudio Del Valle, Vitro’s chief financial and

restructuring officer. That witness testified as to the amount of default interest recognized in

the concurso proceeding.

54

Vitro’s request for relief which, under United States law, would not be available

in this circuit, and would only be available under the narrowest of circumstances

in some of our sister circuits.40

In summary, although extensive testimony was taken before the

bankruptcy courtthatthe LCM’s legal framework is substantially in accordance

with our own, this does not end the analysis of whether to grant comity. See In

re Treco, 240 F.3d at 158-61 (bankruptcy court abused its discretion by affording

comity to Bahamian bankruptcy proceeding without considering effects on

creditor’s claim). The bankruptcy court correctly observed that we have “largely

foreclosed non-consensual non-debtor releases and permanent injunctions

outside of the context of mass tort claims being channeled toward a specific pool

of assets.” Vitro II, 473 B.R. at 131. There appears little dispute that, under

United States law, non-debtor releases, while possible in other circuits, are only

appropriate in extraordinary circumstances. To that end, Vitro was required

to show that something comparable to such circumstances was present here.

The mere fact that the concurso proceeding complied with the relevant

provisions of the LCM is not, in itself, sufficient. Were it otherwise, we would be

treating the extraordinary relief available under § 1507 with the casual

indifference we have already rejected in the context of recognition
Nos. 12-10542, 12-10689, 12-10750

41 Vitro stresses that the Objecting Creditors are sophisticated parties, and that many

noteholders did not purchase notes until after Vitro had defaulted, the implication being that

creditors knew what they were getting into. As a preliminary matter, it appears to us that all

the parties involved are “sophisticated.” We also do not understand why an investor’s

background should excuse a plan’s failure to substantially adhere to our law’s order of

distribution.

We similarly reject the argument that because the Objecting Creditors participated in

the concurso proceeding they are now estopped from resisting Vitro’s Chapter 15 action.

Chapter 15’s protections address a separate set of concerns beyond what may have been

litigated in a foreign proceeding. 

55

determinations under Chapter 15. See In re Ran, 607 F.3d at 1021 (recognition

determination is not a “rubber stamp exercise”). We would also be disregarding

the considerations and safeguards Congress included in § 1507(b).

To that end, we observe that many of the factors that might sway us in

favor of granting comity and reversing the bankruptcy court to that end are

absent here. Vitro has not shown that there existed truly unusual circumstances

necessitating the release. To the contrary, the evidence shows that equity

retained substantial value. The creditors also did not receive a distribution close

to what they were originally owed. Moreover, the affected creditors did not

consent to the Plan, but were grouped together into a class with insider voters

who only existed by virtue of Vitro reshuffling its financial obligations between

it and its subsidiaries. It is also not the case that the majority of the impacted

group of creditors, consisting predominantly of the Objecting Creditors, voted in

favor of the Plan. Nor were non-consenting creditors given an alternative to

recover what they were owed in full.41

Vitro cannot rely on the fact that a substantial majority of unsecured

creditors voted in favor of the Plan. Vitro’s majority depends on votes by

insiders. To allow it to use this as a ground to support enforcement would

amount to letting one discrepancy between our law and that of Mexico (approval

of a reorganization plan by insider votes over the objections of creditors) make
Nos. 12-10542, 12-10689, 12-10750

42 For the same reasons we conclude that, even if § 1521 did provide the broad relief

Vitro seeks, enforcement of this Plan would be precluded under § 1522 for failing to provide an

adequate “balance between relief that may be granted to the foreign representative and the

interests of the persons that may be affected by such relief.” In re Int’l Banking Corp. B.S.C.,

439 B.R. at 626 (quoting Model Law Guide, supra, ¶ 161); see also In re Sivec SRL, 476 B.R.

at 323.

43 Sanchez-Mujica’s declaration only states that “Vitro’s business, as well as those who

have an interest in seeing Vitro’s business succeed, such as its customers and creditors, will

continue to suffer immense harm” if the Plan is not enforced.

56

up for another (the discharge of non-debtor guarantors). Cf. CIBC Bank & Trust

Co. (Cayman) Ltd., 886 F. Supp. at 1114.42

Vitro argues that there would be financial chaos as a result ofthe Plan not

being enforced. We are aware of the adverse consequences that may ensue from

the decision notto enforce the Plan. But Vitro’s reasoning seeks to justify a prior

bad decision on the basis that not enforcing it now would lead to further negative

consequences.43 Worse, the harm from those consequences would predominantly

affect Vitro, the party responsible for bringing about this state of affairs in the

first place. Vitro cannot propose a plan that fails to substantially comply with

our order of distribution and then defend such a plan by arguing that it would

suffer were it not enforced. Vitro’s two-wrongs-make-a-right reasoning is

unpersuasive. 

Those cases Vitro points to in which a similar discharge of non-debtor

obligations was allowed are inapposite. The closest factual analog to this case

is the bankruptcy court’s decision in Metcalfe. As here, the central issue in

Metcalfe was “[t]he enforceability of the non-debtor release and injunction on

private civil actions in the United States” contained in a Canadian court order

approving a restructuring plan. 421 B.R. at 687-88 n.1. Recognizing that “a

third-party non-debtor release ‘is proper only in rare cases,’” id. at 694 (quoting

Metromedia, 416 F.3d at 141), the court nevertheless found that approval was

not precluded under § 1507, id. at 697. The only explanation the court provided
Nos. 12-10542, 12-10689, 12-10750

57

was that the non-debtor release and injunction provisions “treat[ed] all

claimants in the Canadian Proceedings similarly” and that“[n]o objections ha[d]

been lodged that inclusion of these provisions adversely affects any claimant’s

treatment against any of the debtors’ property.” Id. The bankruptcy court

distinguished Metcalfe because, in that case, “there was near unanimous

approval of the plan by the creditors, who were not insiders of the debtor . . . .

the plan was negotiated between the parties and there appears not to have been

a timely objection . . . . [and] the release was not complete like the one in the

present case.” Vitro II, 473 B.R. at 131. 

We agree that Metcalfe is distinguishable. The fact that the Plan approved

here was the result of votes by insiders holding intercompany debt means that,

although under Metcalfe non-debtor releases may be enforced in the United

States under Chapter 15, the facts of this case exceed the scope of that decision.

We further observe that in that case the Canadian court’s decision to approve

the non-debtor release “reflect[ed] similar sensitivity to the circumstances

justifying approving such provisions,” a sensitivity we find absent in the

Mexican court’s approval of the Plan. 421 B.R. at 698. The Canadian court’s

decision was also the result of “near-cataclysmic turmoil in the Canadian

commercial paper market following the onset of the global financial crisis.” Id.

at 700. As already discussed, Vitro’s evidence on this point largely emphasizes

the turmoil only Vitro would be exposed to.

Vitro also relies on our decision in Republic Supply Co. v. Shoaf, 815 F.2d

1046 (5th Cir. 1987). In that case, “we address[ed] the question whether [the]

bankruptcy court’s confirmation order which, beyond the statutory grant of the

[Bankruptcy] Code, expressly released a third-party guarantor, [was]to be given

res judicata effect.” Id. at 1047. We held that once a reorganization plan passed

the appeal stage it could not be challenged even though it violated the

Bankruptcy Code’s prohibition on such discharges. Id. at 1050. Aside from the
Nos. 12-10542, 12-10689, 12-10750

44 Presumably, Vitro is arguing thatthe Mexican court’s decision is the prior action and,

thus, the bankruptcy court and this court are required to recognize that foreign court’s holding

and confer it res judicata effect. Such reasoning conflates the difference between a foreign

ruling and the bankruptcy court’s decision to grant relief pursuant to Chapter 15, and is

rejected.

45 The other cases Vitro and Fintech cite in support appear to have involved consensual

agreements between the parties and are thus inapposite.

58

fact that Republic Supply Co. was a case aboutthe effects of res judicata and has

been distinguished for not addressing the legality of non-debtor releases, see In

re Pacific Lumber Co., 584 F.3d at 252 n.27, we have also emphasized the

“limited nature” of that decision, In re Applewood Chair Co., 203 F.3d 914, 918

(5th Cir. 2000). For example, Republic Supply Co. involved a reorganization

plan in which a third-party guarantor and creditor were specifically discharged.

815 F.2d at 1051-54. We have distinguished other cases for including general,

as opposed to specific, releases. Applewood Chair, 203 F.3d at 919. As a result,

Republic Supply Co. provides no guidance where, as here, we are confronted not

by a specific release, but by a general release of all the non-debtor subsidiaries.

See id.44, 45

On the basis of the foregoing analysis, we hold that Vitro has not met its

burden of showing that the relief requested under the Plan—a non-consensual

discharge of non-debtor guarantors—is substantially in accordance with the

circumstances that would warrant such relief in the United States. In so

holding, we stress the deferential standard under which we review the

bankruptcy court’s determination. It is not our role to determine whether the

above-summarized evidence would lead us to the same conclusion. Our only task

is to determine whether the bankruptcy court’s decision was reasonable. See

Friends for Am. Free Enter. Ass’n v. Wal-Mart Stores, Inc., 284F.3d 575, 578 (5th

Cir. 2002) (“‘Generally, an abuse of discretion only occurs where no reasonable

person could take the view adopted by the trial court.’” (quoting Dawson v.
Nos. 12-10542, 12-10689, 12-10750

59

United States, 68 F.3d 886, 896 (5th Cir. 1995))); Bear Stearns, 389 B.R. at 333

(relief under § 1521 and § 1507 is largely discretionary). Having reviewed the

record and relevant caselaw, we conclude that the bankruptcy court’s decision

was reasonable. 

4. Section 1506’s Bar to Relief

The bankruptcy court concluded that “the protection of third party claims

in a bankruptcy case is a fundamental policy of the United States” and held that

even if Chapter 15 relief were appropriate, it would be barred under § 1506

because “the Concurso plan does not recognize and protect such rights.” Vitro

II, 473 B.R. at 132. 

Section 1506 provides that “[n]othing in [Chapter 15] prevents the court

from refusing to take an action governed by this chapter if the action would be

manifestly contrary to the public policy of the United States.” 11 U.S.C. § 1506.

The narrow public policy exception contained in § 1506 “is intended to be

invoked only under exceptional circumstances concerning matters of

fundamental importance for the United States.” In re Ran, 607 F.3d at 1021.

“The key determination required by this Court is whether the procedures used

in [the foreign proceeding] meet our fundamental standards of fairness.”

Metcalfe, 421 B.R. at 697. A court need not engage in an “independent

determination about the propriety of individual acts of a foreign court.” Id.

Furthermore, even the absence of certain procedural or constitutional rights will

not itself be a bar under § 1506. See In re Ephedra Prods. Liab. Litig., 349 B.R.

333, 336 (S.D.N.Y. 2006) (“Federal courts have enforced against U.S. citizens

foreign judgments rendered by foreign courts for whom the very idea of a jury

trial is foreign.”). 

As already discussed,this court holds thatthe Bankruptcy Code precludes

non-consensual, non-debtor releases. In re Pac. Lumber Co., 584 F.3d at 252.

Nevertheless, not all our sister circuits agree, and we recognize that the relief
Nos. 12-10542, 12-10689, 12-10750

46 For the same reason, we do not reach the Objecting Creditors’ arguments that the

Plan violates a fundamental public policy for infringing on the absolute priority rule, the

Contract Clause of the United States Constitution, U.S. Const. art. I, § 10, cl. 1, the Trust

Indenture Act of 1939, 15 U.S.C. §§ 77aaa, et seq., or the interests of the United States in

protecting creditors from so called “bad faith schemes.”

60

potentially available under § 1507 was intended to be expansive. At the same

time, § 1506 was intended to be read narrowly, a fact that does not sit well with

the bankruptcy court’s broad description of the fundamental policy at stake as

“the protection of third party claims in a bankruptcy case.” Vitro II, 473 B.R. at

132. Because we conclude that relief is not warranted under § 1507, however,

and would also not be available under § 1521, we do not reach whether the

Concurso plan would be manifestly contrary to a fundamental public policy of

the United States.46

IV. CONCLUSION

For the aforementioned reasons, we AFFIRM in all respects the judgment

of the district court affirming the order of the bankruptcy court in No. 12-10542,

and we AFFIRM the order of the bankruptcy court in Nos. 12-10689 and 12-

10750. The temporary restraining order originally entered by the bankruptcy

court, the expiration of which was stayed by this court, is VACATED, effective

December 14, 2012. Each party shall bear its own costs.