The need for reform to the Commercial Insolvency Law for the benefit of SMEs is a crucial topic in the economic and legal spheres.
The Commercial Insolvency Law published in May 2000 was undoubtedly an innovative regulation for its time. Following the previous Bankruptcy and Suspension of Payments Law, new figures and tools were created for companies facing insolvency issues, providing alternatives for restructuring their debts or orderly liquidation through bankruptcy.
However, it is important to note that the commercial insolvency procedures outlined in the current law are mostly aimed at large companies. This can be inferred from the expenses associated with the insolvency process, known as ordinary expenses, such as the payment of fees for each specialist depending on the stage of the procedure (visit, conciliation, or bankruptcy), as well as other formalities and documentation required by the Insolvency Law. These requirements often prevent small companies that cannot meet these criteria from accessing the insolvency procedure.
Now, 99% of the companies in Mexico are small and medium-sized enterprises (SMEs), which account for around 42% of the country's Gross Domestic Product (GDP). They are considered an important driver of the economy in Mexico as they encompass various sectors and cater to the population's needs, including commerce, industries, and services.
However, one of the disadvantages that SMEs may face is their limited ability to respond during times of financial stress, which puts them in a vulnerable state during economic crises. This, in turn, hampers the growth and continuity of such companies, as many of them opt to liquidate the business privately rather than going through a costly bankruptcy proceeding. In fact, the expenses associated with a bankruptcy process may surpass the debts owed to creditors at the time of filing for bankruptcy, making it financially unfeasible for SMEs to reach a settlement with their creditors through this route.
Therefore, the undersigned proposes the need for a reform of the Bankruptcy Law to include a more accessible and agile pre-bankruptcy procedure for SMEs, based on what is already provided for in Article 312 of the Bankruptcy Law. This procedure would be simpler, allowing the company and its creditors to approach the Federal Institute of Specialists in Bankruptcy (IFECOM) to appoint a conciliator who would assist them in reaching a friendly settlement. This process would not entail all the requirements and formalities of a full-fledged bankruptcy proceeding.
So essentially, the pre-bankruptcy procedure would involve the company and its creditors appearing before the IFECOM, where a conciliator would be appointed. The conciliation agreement would then be presented to the same Institute, which would be responsible for implementing and perfecting it in accordance with the formalities and requirements set forth in the Bankruptcy Law. Once signed by the company and its creditors, the file would be compiled and presented to the Specialized Court in Bankruptcy Matters for ratification and approval. This process aims to provide legal certainty to all parties involved in the procedure.
So, we conclude that the Law is improvable, and recognizing the state of emergency in which a small or medium-sized company seeks to negotiate an agreement with its creditors and settle its debts should be facilitated by all means. This would make bankruptcy proceedings a more agile, versatile, and accessible tool so that companies facing insolvency challenges can resume their operations, reintegrate into ordinary commercial activities, and ultimately contribute to the growth and economic development of the country.
