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In this article, the author reviews in detail a corporate restructuring that highlights the ability to navigate legal barriers imposed by English, United States, and Mexican insolvency laws while ensuring an enforceable and comprehensive solution.
Mega Newco Limited's restructuring stands as a masterclass in jurisdictional engineering and legal ingenuity, demonstrating how financial distress in one jurisdiction can be resolved through a carefully structured international approach.
The case highlights the ability to navigate legal barriers imposed by English, United States, and Mexican insolvency laws while ensuring an enforceable and comprehensive solution. At the heart of this restructuring is Operadora de Servicios Mega, S.A. de C.V., SOFOM, E.R. (the Parent),¹ a Mexican non-bank financial institution headquartered in Guadalajara, Jalisco, which faced severe liquidity constraints and the impending default on its $350 million U.S. Notes due February 2025, governed by New York law.
Traditional restructuring routes (including Mexican insolvency proceedings (concurso mercantil), Chapter 11 of the U.S. Bankruptcy Code, and out-of-court restructuring under New York law) proved unworkableo circumvent legal obstacles, the Parent adopted an ambitious strategy by incorporating Mega Newco in England, thereby gaining access to an English scheme of arrangement under Part 26 of the Companies Act 2006. This allowed the Parent to restructure its obligations on a globally enforceable basis while avoiding the pitfalls of U.S. and Mexican insolvency frameworks.
This approach was further validated when the U.S. Bankruptcy Court for the Southern District of New York granted Chapter 15 recognition, ensuring that the restructuring was enforceable against U.S.-based creditors.
Mega Newco Limited's restructuring stands as a masterclass in jurisdictional engineering and legal ingenuity, demonstrating how financial distress in one jurisdiction can be resolved through a carefully structured international approach.
The case highlights the ability to navigate legal barriers imposed by English, United States, and Mexican insolvency laws while ensuring an enforceable and comprehensive solution. At the heart of this restructuring is Operadora de Servicios Mega, S.A. de C.V., SOFOM, E.R. (the Parent),¹ a Mexican non-bank financial institution headquartered in Guadalajara, Jalisco, which faced severe liquidity constraints and the impending default on its $350 million U.S. Notes due February 2025, governed by New York law.
Traditional restructuring routes (including Mexican insolvency proceedings (concurso mercantil), Chapter 11 of the U.S. Bankruptcy Code, and out-of-court restructuring under New York law) proved unworkableo circumvent legal obstacles, the Parent adopted an ambitious strategy by incorporating Mega Newco in England, thereby gaining access to an English scheme of arrangement under Part 26 of the Companies Act 2006. This allowed the Parent to restructure its obligations on a globally enforceable basis while avoiding the pitfalls of U.S. and Mexican insolvency frameworks.
This approach was further validated when the U.S. Bankruptcy Court for the Southern District of New York granted Chapter 15 recognition, ensuring that the restructuring was enforceable against U.S.-based creditors.
