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Mexico

Stabilisation and restructuring law in Mexico

Table of contents
  1. Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?
  2. Which medium-to long-term stabilisation measures are in place in your jurisdiction?
  3. Which measures (Guarantees, Loans, Equity Injections, etc.) are available?
  4. Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?
  5.  Which prerequisites are necessary to qualify for a programme?
  6.  Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?
  7.  In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?
  8. Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?
  9. How are insolvency application deadlines handled in times of Corona?
  10. How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?
  11. Are there any particular Corona-related rules on cross-border insolvencies and restructurings in place in your country?
  12. Which restructuring/insolvency measures instead of a wind down are available for Corona-related restructurings of entities with an international design or background in your country?
Mexico

1. Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?

Until today, March 24, 2020, the Federal Government has not published which financial schemes will be implemented in the next few weeks. Nonetheless, various states are already implementing financial measures to control the effects of social distancing. For example, the State of Jalisco Implemented different measures in order to help the state’s economy; by creating a fund of 1 billion pesos in order to help micro and small businesses, corn farmers, self-employed people, and informal jobs. Also, states like Guanajuato and Oaxaca are implementing financial measures to reduce the impact of the crisis.

Hugo López-Gastell,  Deputy secretary of Prevention and Health Promotion, urged private and public institutions not to suspend their económic activities such as food production, logistics, and services; but rather, all State and private dependencies are urged to put in force their continuity operation plans.

2. Which medium-to long-term stabilisation measures are in place in your jurisdiction?

President Andrés Manuel López Obrador has created three main programs: Medical Health Program; Plan Marina; and Plan DN-III-E. All three programs are focused on public health, food and medicine distribution, medical staff support, provisional hospital building, specialized supply purchases, etc. These plans, Plan Marina and Plan DN-111-E, will be granted an additional 4,500 million peso subsidy as stated by Arturo Herrera, Secretary of the Treasury and Public Credit. In addition, 25,000 million pesos will be transferred for State initiatives and health prevention plans as well as 4,500 million pesos that the Institute for Health and Welfare (INSABI) has contemplated for the purchase of medicines. Finally, a modification was made to the General Health Law, through a transitory article so that the 40 billion pesos of the INSABI Welfare Fund can be used to react to the adversities of the crisis. In conclusion, the Executive Branch wishes to maintain social welfare programs,  project construction, and microcredits to small businesses after the COVID-19 pandemic has ended.

The Federal Government announced 5 main reactionary policies against COVID-19:

  • Protect and care for the elderly and other groups at greater risk;
  • Suspend classes throughout the national education system from March 23rd to April 19th, 2020;
  • Temporarily suspend events and meetings of 100 people or more;
  • Temporarily suspend labor activities involving the mobilization of people in all sectors of society;
  • Intensify basic prevention measures.

3. Which measures (Guarantees, Loans, Equity Injections, etc.) are available?

Diverse sectors and groups, like the Business Coordination Council (CCE) and the National Council for Business Tourism (CNTE), have published measures and petitions for the government to take into consideration which include lowering and return tax payments, guaranteeing the solvency and financial liquidity of the financial market and strengthening the agreements between the private and public sphere. However, the Federal Government has not issued public statements enforcing any of the measures proposed by the private sector.  

Mexican banks are instituting measures to allow loan holders to defer payments up to six months under a relief plan forwarded by the country's banking association (ABM) amid the COVID-19 crisis.

The measures will apply to credit cards, automotive credit, payroll loans, mortgages, small and medium-sized companies and personnel, and will benefit those clients who request it, as they have been directly or indirectly affected by COVID-19.

4. Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?

Until today, March 24, 2020, there are only recommendations for such measures.

5. Which prerequisites are necessary to qualify for a programme?

Since the current programs are local, the prerequisites necessary to qualify to depend on each state. 

6. Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?

In the official Government Press Conference of March 24, 2020, Dr. Hugo Lopez-Gatell Ramirez, Deputy Secretary of Prevention and Health Promotion stated that cross-border restrictions, and/or mobility restrictions are a last resort measure that should not be used except as a public health measure.

Regarding the cross-border restrictions, Marcelo Ebrard, Mexican Secretary for Foreign Affairs stated that he is currently negotiating with Mike Pompeo, Secretary of State of the United States of America, possible solutions to maintain the border between the United States and Mexico open for economic and commercial purposes. Moreover, Francisco García Cabeza de Vaca, Governor of Tamaulipas, also had negotiations with Texas authorities to homologate the measures and guidelines on both sides of the border. 

7. In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?

As stated previously, every state is applying for the moment a different plan of action to tackle the financial effects of the crisis. Therefore, whether mother/holding companies are able to apply depends on each state.

8. Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?

Until today, March 24, 2020, there is no stabilization scheme that restricts the use of cash, nor any other type of restriction.

9. How are insolvency application deadlines handled in times of Corona?

Until today, March 24, 2020, there are only recommendations for such measures.  

10. How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?

Until today, March 24, 2020, there are only recommendations for such measures.

Until today, March 24, 2020, there are only recommendations for such measures.

Until today, March 24, 2020, there are only recommendations for such measures.