Steel Mills

AHMSA Files for U.S. Chapter 15 Protection after Emerging from Mexican Bankruptcy

August 16, 2016

Mexican steel mill Altos Hornos de Mexico SA (AHMSA) filed a petition on August 16, 2016 for Chapter 15 protection in the U.S. Bankruptcy Court for the District of Delaware.

AHMSA, has ended a drawn out Mexican bankruptcy process that provided court protection to the company for the past 17 years. A payment plan was accepted by the creditors on April 18, 2016 and the Suspension of Payment Proceeding was lifted by the Mexican Court on May 16. The appeal time period for the actions has expired without any opposition and the Lifting Order is a now a final, non-appealable order.

The filing of the Chapter 15 petition asks the U.S. court to recognize the lifting of the SP proceedings and to facilitate an orderly implementation of the approved restructuring plan. The Chapter 15 petition also asks the U.S. court to forbid parties in the U.S. from any actions or claims against AMHSA assets in the U.S. that would contravene the Restructuring Plan or Lifting Order.

The AHMSA restructuring plan calls for repayment of $1.7 billion to creditors over the next three years. More than half of the debt (69.15 percent) was accepted by creditors in the form of company shares with the remaining 30.85 percent to be paid in cash.

AHMSA plans to focus on progressing as a viable, healthy business and building upon its competitive strengths as one of Mexico’s largest integrated steel producers.

The press release from AHMSA explains the Chapter 15 Code:

Chapter 15 of the U.S. Bankruptcy Code facilitates cross-border insolvency proceedings by authorizing U.S. Bankruptcy Courts to assist a representative of a foreign court in its administration of a foreign insolvency proceeding in the U.S. At its core, chapter 15 provides a U.S. Bankruptcy Court with the authority to recognize and enforce judgments and orders of foreign bankruptcy courts. Generally, chapter 15 provides for the fair and efficient administration of cross-border insolvencies to protect the interests of relevant parties, including the debtor and creditors.