RX 101: Mexico Restructuring Cash Control, Delays and Forum Choice Shape Recoveries; TV Azteca Tests Bondholder Leverage

Relevant Document:
Javier Garibay, “When the Denominator Becomes the Battlefield: Bondholder Control in Mexican Concurso, and What TV Azteca Is Teaching the Market” (2026)

Mexican distressed investments can carry valid security and enforceable claims while offering creditors limited control over collections, lengthy enforcement timelines and exposure to a restructuring process chosen by the debtor, Francisco Javier Garibay Güémez, a partner at Fernández, García-Naranjo, Boker & Garibay SC in Mexico City, told Octus in a conversation on distressed investing.

The gap between documented rights and realizable value creates both risk and opportunity, particularly where creditors price positions by their contractual ranking. Garibay said investors need to assess recovery alongside control, timing and the alternatives that remain available if an expected restructuring or enforcement route fails.

“A legal right is not the same thing as an investable outcome,” he said.

Garibay, author of “Distressed Investing in Mexico: From Legal Rights to Investable Outcomes,” said the distinction does not mean Mexican law is hostile to creditors. Guarantee trusts, protections for secured creditors who do not sign the restructuring agreement, or convenio, and certain out-of-court enforcement mechanisms can provide meaningful rights. Their investment value, however, depends on access to cash, operational information, procedural authority and the ability to withstand delay.

Mexico’s distress pipeline reflects several different pressures, he said. Funding mismatches drove the nonbank lender and leasing-company crisis, while cyclical weakness, external shocks and governance failures produce different combinations of collateral, information and cross-border risk. Each requires a separate assessment of how a claim becomes cash or control, according to Garibay.

TV Azteca’s case illustrates those execution risks within a formal restructuring. In his October article, “When the Denominator Becomes the Battlefield: Bondholder Control in Mexican Concurso, and What TV Azteca Is Teaching the Market,” Garibay argues that the Mexican claims-recognition process could be more consequential for recoveries in this case than the more visible chapter 15 recognition dispute. Claim amounts, creditor classifications and authority to act determine whether bondholders can exercise the leverage their holdings appear to provide, according to Garibay.
 

Mexico’s concurso mercantil remains an infrequently used route for resolving distress, Garibay said. Fewer than one-third of concluded cases ended in a convenio, or court-approved restructuring agreement.

“The concurso is not the default mechanism for resolving distress in Mexico,” he said. “Most situations are resolved or left unresolved somewhere else.”

Banks often prefer bilateral waivers, maturity extensions, collateral additions and forbearance to collective proceedings, Garibay explains. Bond restructurings face different constraints: dispersed ownership, custodial chains, weaker information rights and consent requirements that can impede changes to payment terms.

Out-of-court bond restructurings in Mexico “rarely succeed without the threat of a proceeding that can bind dissenters,” Garibay said.

The formal process is also only one of several available routes. Garibay pointed to Crédito Real’s initial corporate liquidation, Aeroméxico’s chapter 11 and Mega’s English scheme of arrangement, recognized under chapter 15, as examples of Mexican distress being addressed or initially pursued outside concurso.

“The forum is usually chosen by the debtor, not the creditor, and very often by the party least interested in creditors’ recovery,” he said.

For investors, that means testing claims against processes beyond the one assumed at purchase. A foreign restructuring may require additional steps to affect Mexican assets, while a Mexican agreement may face separate obstacles to enforcement abroad.

“An investor that priced its position on one process may find that the process has been changed around it,” Garibay said.

That distinction is central to his TV Azteca analysis. Recognition of the Mexican proceeding in the United States would not, by itself, enforce a future convenio against dissenting holders of New York-law notes, he writes.

Collateral, Collections and the Cost of Time

Contractual seniority can obscure operational weaknesses, particularly in receivables-backed financing, Garibay said. A creditor may hold valid security while the borrower retains the collection accounts, servicing systems, customer information and payment mandates needed to generate recoveries.

Whoever holds the collection account and receives the account bank’s cooperation controls the cash, he said, and “that someone is usually the debtor, even when the receivables belong to somebody else.”

Security over operating assets presents another constraint. During the first stage of a concurso proceeding, conciliation, enforcement may depend on whether the court finds the collateral strictly indispensable to the business. Protected labor claims and applicable preservation and realization costs can also reduce the proceeds available to secured creditors, according to Garibay.

Those frictions become more expensive as proceedings lengthen. Garibay contrasted ICA’s approximately six-month route to convenio approval with substantially longer timelines in Unifin, Crédito Real and AHMSA. Appeals can extend uncertainty after an agreement is approved.

“For most Mexican positions, the time value and deterioration discounts are larger than the priority discount,” Garibay said.

Garibay asserted that delays affect more than the present value of a distribution. Receivables run off, equipment depreciates, employees and customers leave, and expenses accumulate. Garibay described duration as “the single most important input in a Mexican recovery model,” adding that it must be “in plain view, not hidden inside a discount rate.”

Limited rescue financing compounds those pressures. Although Mexico’s Ley de Concursos Mercantiles permits necessary financing and security during proceedings, Garibay said its ranking behind protected labor claims and, with respect to existing collateral, secured creditors, along with other constraints, limits its practical availability.

“In practice, debtors in concurso are financed by their own collections, by asset sales, or by the controlling shareholder,” he said.

Delay also changes negotiating power.

“A debtor that can delay holds an asset,” Garibay said. “A creditor that cannot wait carries a liability.”

Garibay said the effect of the 2024 judicial reform on insolvency outcomes in Mexico, which introduced popular election of federal judges, could not yet be measured, but noted that the case for utilizing guarantee trusts and account-control structures that reduce dependence on judicial action has strengthened.
 

TV Azteca brings Garibay’s broader framework into the claims recognition process, where the amount and rank of a liability affect both distributions and restructuring power.

The company’s concurso was declared on July 6, 2026. In an October objection to the conciliador’s provisional creditor list, TV Azteca sought to reduce the recognized liability associated with its $400 million of 8.25% senior notes due 2024 from approximately $595 million to $137 million, a figure derived from the notes’ market value at the declaration date.

Garibay notes that the provisional list had divided the note-related liability into five common-claim entries totaling approximately $595 million, excluding a small individualized holding. Its market-value and residual entries together restored the outstanding principal and unpaid coupons, with a further entry for post-maturity interest.

TV Azteca objected to four entries and sought to retain the $137 million market-value entry, with an alternative argument concerning an interest entry.

Garibay argues that Mexican insolvency law restates a matured bond claim by converting the relevant obligation under the statutory framework, rather than valuing the claim at its distressed secondary-market trading price. In his analysis, Mexican insolvency law converts the contractual unsecured foreign-currency claim into inflation-indexed investment units, or UDIs, and stops further interest accrual; it does not reduce the claim to its distressed trading price.

He nevertheless distinguishes that conclusion from disputes over the provisional list’s construction and the amount of interest owed. His article identifies separate questions concerning accounting provisions, post-maturity interest and the calculation of interest on overdue coupons.

The implications extend beyond the size of a potential distribution. A smaller recognized bond claim would also reduce the holders’ weight in the statutory voting calculations.
 

Garibay’s article identifies three separate calculations governing approval and treatment under a convenio.

Approval requires signatures representing more than half of recognized common and subordinated claims, together with secured claims whose holders choose to sign. Separately, non-signing common creditors holding more than half of recognized common claims can veto an agreement unless it provides full payment on the statutory terms. Imposing a payment extension or write-down on non-signing common creditors also requires qualifying acceptance by signing common creditors representing at least 30% of common claims, Garibay writes.

Those calculations can produce different measures of influence for the same bonds.

In an illustrative scenario using the revised provisional list in TV Azteca’s case, with both secured creditors signing and group claims remaining subordinated and acceding to the agreement, the note entries represented 39.5% of the approval base but 75.1% of common claims, according to Garibay.

Under those assumptions, coordinated, recognized non-signing holders representing more than half of common claims could exercise the veto. Other common creditors, representing 24.9%, could not independently supply the 30% acceptance threshold for imposing the relevant treatment, Garibay writes.

If only the $137 million entry survived, the note-related liability would instead represent 41.2% of common claims in Garibay’s illustration. Holders would lose that majority veto, and other common creditors could reach the 30% threshold without them.

The scenarios are conditional. Garibay identifies the recognized note amount, secured-creditor rankings and signatures, group-creditor treatment and holders’ recognition and coordination as assumptions that later decisions could change.

His analysis also shows why subordinated intercompany claims remain relevant. Their classification changes the common-creditor denominator, while their size and accession to an agreement can affect whether a special majority excluding certain related claims is required.

For investors evaluating a blocking position, Garibay’s article makes the claims-recognition file part of the investment analysis: The position’s influence depends on the claims counted alongside it and the statutory test being applied.
 

The TV Azteca dispute also illustrates the difference between having a liability recorded and having a recognized creditor able to exercise rights attached to it.

According to Garibay’s article, the conciliador’s provisional lists declined to recognize the indenture trustee’s claim, principally questioning whether it had demonstrated ownership of all the bonds, alongside objections concerning interest and the pending New York litigation. The bulk of the note-related liability nevertheless remained on the list under generic entries, Garibay writes.

Garibay argues that the statutory collective-claim mechanism permits a representative to seek recognition while individual holders file separately, with individual claims deducted from the collective amount.

He also distinguishes the trustee’s contractual powers. The indenture authorizes it to file proofs of claim without owning the notes, but expressly withholds authority to adopt a restructuring or vote holders’ claims on their behalf.

Potential voting power depends on recognition, evidence and coordination through the applicable bond mechanisms. Garibay’s article says holders seeking to sign or block must individualize their claims within the relevant recognition windows and establish their position through the depositary and custodial chain.
 

Challenges to other creditors’ security and related-party status can also change the voting calculations. Garibay’s article describes contested questions concerning AlterBank’s – listed as TV Azteca’s largest secured creditor in the provisional creditor list – financing, security and alleged relationships, while recording the conciliador’s contrary assessment of allegations concerning the loan. It treats the debt’s validity, the effectiveness of its security, its ranking, related-party status and voting treatment as separate issues.

Garibay does not conclude that AlterBank’s security is invalid or that the lender is a related party. His article explains how findings on those unresolved questions could change the creditor claims counted toward approval and whether special-majority protections apply.

Rights outside the parent’s Mexican proceeding require similarly separate treatment. Garibay writes that a parent-level convenio does not automatically eliminate claims against guarantors, but he notes that 10 subsidiaries, including seven guarantors, had filed their own concurso petitions by Oct. 6. Each introduces a separate estate, recognition process and potential restructuring of that guarantor’s debt, Garibay writes.

Garibay also cautions against treating the transfer of broadcasting concessions to a TV Azteca subsidiary as an established avoidance claim. Instead, creditors should examine whether the subsidiary receiving the licenses should have guaranteed the bonds, and whether creditors can reach the assets held there.

For distressed and special situations funds, restructuring advisors and investment banks, Garibay’s central message is that a legal determination confirming the validity of a claim or security interest is only the starting point. Investors must assess whether that right can be converted into controlled cash, a voting position or another realizable outcome within a time frame and process they can withstand.

As Garibay said during the conversation with Octus, “the existence of a legal right is the beginning of the analysis, not its conclusion.”