Ad Hoc Group of Vitro Noteholders v. Vitro S.A.B. De C.V.

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
November 28, 2012

No. 12-10542 Lyle W. Cayce
Clerk

In the Matter of: VITRO SAB DE CV,

Debtor
___________________________

AD HOC GROUP OF VITRO NOTEHOLDERS,

Appellant

VITRO SAB DE CV,

Appellee
___________________________

________________________

Appeals 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,

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

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

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.

2
Nos. 12-10542, 12-10689, 12-10750

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 of the 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 throughout the 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

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

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

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

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

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

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

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
Concursos Mercantiles—the Federal Institute of Specialists of Insolvency Procedures—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.

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

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

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

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 payment trusts, 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;

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.

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

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,

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.

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

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 that the Mexican reorganization proceeding was a “foreign main

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.

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

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

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.

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

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, 564 F.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 of the 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, Sanchez-
Mujica 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

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.

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

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 that they 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 co-
foreign 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

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

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 the Plan novated guaranty obligations of non-
debtor 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 Cross-
Border 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

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’l L.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

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

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.

has been granted.”).

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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 court is 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

16
Nos. 12-10542, 12-10689, 12-10750

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 insufficient to 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 co-
foreign 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

17
Nos. 12-10542, 12-10689, 12-10750

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

18
Nos. 12-10542, 12-10689, 12-10750

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

14
The district court was skeptical of whether Sanchez-Mujica and Arechavaleta-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
Nos. 12-10542, 12-10689, 12-10750

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 that this 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.

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

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”

21
Nos. 12-10542, 12-10689, 12-10750

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

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

requesting such an order, the Mexican court denied it in 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 Cross-
Border 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

16
The conciliador also submitted a letter to the bankruptcy court, as a party in interest,
to the effect that 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
Nos. 12-10542, 12-10689, 12-10750

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 Sanchez-
Mujica 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

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

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

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

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-in-
possession 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 of the 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

26
Nos. 12-10542, 12-10689, 12-10750

de mayo de 2000, art. 74 (debtor will be entrusted with enterprise’s management
throughout conciliation stage unless court grants conciliador’s request to 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 Arechavaleta-
Santos are properly appointed foreign representatives under Chapter 15.

27
Nos. 12-10542, 12-10689, 12-10750

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

28
Nos. 12-10542, 12-10689, 12-10750

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, 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”

29
Nos. 12-10542, 12-10689, 12-10750

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
Monetary Fund, 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 argument that 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 that the 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 of the Plan, and that the Concurso plan violates the

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

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 non-
consenting 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 of these 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.

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

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

32
Nos. 12-10542, 12-10689, 12-10750

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

33
Nos. 12-10542, 12-10689, 12-10750

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 fact that 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);

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

(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, at the 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

35
Nos. 12-10542, 12-10689, 12-10750

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

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 of this 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
Nos. 12-10542, 12-10689, 12-10750

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 of these 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

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

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 Cross-
Border 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”).

38
Nos. 12-10542, 12-10689, 12-10750

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

39
Nos. 12-10542, 12-10689, 12-10750

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 non-
debtors, 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

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

§ 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

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 of the Guarantors’ obligations.

41
Nos. 12-10542, 12-10689, 12-10750

For substantially the same reason, we reject the bankruptcy court’s
suggestion that § 1521(b) applies. Section 1521(b) provides that “the court may,
at the 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.” 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

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

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 that the 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 of the 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.

32
While we agree with the bankruptcy court that Metcalfe is ultimately 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
Nos. 12-10542, 12-10689, 12-10750

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 of the 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.

44
Nos. 12-10542, 12-10689, 12-10750

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

45
Nos. 12-10542, 12-10689, 12-10750

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

46
Nos. 12-10542, 12-10689, 12-10750

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 not to 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 against it, and creditors who opted out would have had their
claims fully satisfied by staying within settlement agreement).
The decisions of these 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.

47
Nos. 12-10542, 12-10689, 12-10750

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

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 with the explicit requirement that 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
resort to 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
Nos. 12-10542, 12-10689, 12-10750

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

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, at the 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 found that testimony “credible,” without making any specific factual
findings, and only made his credibility finding within the scope of arguments the court did not
reach.

49
Nos. 12-10542, 12-10689, 12-10750

a ruling by a New York state court holding that the indentures expressly
prohibited modification of the Guarantors’ obligations.
We conclude that the 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

37
We found the discussion on this issue in the amicus curiae brief filed by the United
Mexican States of assistance.

50
Nos. 12-10542, 12-10689, 12-10750

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
not interfere 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 court in Metcalfe, which, while recognizing that a third-
party non-debtor release might be inappropriate under United States law, left
it to the Canadian courts to determine whether they had the jurisdiction to grant
such relief. 421 B.R. at 697-700.

51
Nos. 12-10542, 12-10689, 12-10750

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%—of the 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

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

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 of the 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 result likely 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
of the 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

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

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 court that the 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

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 cannot themselves 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
Nos. 12-10542, 12-10689, 12-10750

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

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

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 of the Plan not
being enforced. We are aware of the adverse consequences that may ensue from
the decision not to 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

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

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

57
Nos. 12-10542, 12-10689, 12-10750

fact that Republic Supply Co. was a case about the 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., 284 F.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.

44
Presumably, Vitro is arguing that the 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
Nos. 12-10542, 12-10689, 12-10750

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 that the 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

59
Nos. 12-10542, 12-10689, 12-10750

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
with the issuance of our mandate in Nos. 12-10689 and 12-10750. Each party
shall bear its own costs.

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.”

Ad Hoc Group of Vitro Noteholders v. Vitro S.A.B. De C.V.

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