White & Case's Thomas Heather Appointed Mediator for Satmex Insolvency

Mexico City, October 6, 2005 ... White & Case partner Thomas S. Heather has been appointed by Mexico’s Communications Ministry to serve as mediator in the complex restructuring of Satmex, the Mexican satellite company, in order to accelerate the insolvency process.  The matter is considered to be one of the first major Mexico-US cross-border insolvency cases.

"Satmex has until October 31 to present a draft restructuring plan in the New York court.  Failing to meet the deadline without some show of advancement could result in the case being reheard before Judge Robert Drain of US Bankruptcy Court of the Southern District of New York where creditors had filed an involuntary Chapter 11 proceeding, but was then dismissed," said Heather.  "Such litigation could be costly in many ways to all parties involved, so my job is to help move the process forward as efficiently as possible with a plan that works for everyone."

Heather, who is based in White & Case’s Mexico City office, has more than 20 years experience in the areas of restructurings, mergers and acquisitions, banking, securities and corporate governance.  A co-founder and immediate past chair of the Mexican Mediation Institute, Heather chairs the Financial Law Section of the Mexican Bar Association and is a member of the Board of the Mexican Institute of Corporate Governance. In addition, Heather has been at the forefront of significant alternative dispute resolution and trade-related initiatives. He participated in the NAFTA negotiations with respect to the Financial Services Chapter, and has been selected on several occasions as an arbitrator by the ICC Court of International Arbitration in Paris. He has served on several boards of leading corporations and financial institutions and has lectured extensively in Mexico and in the US. The Mexican magazine Lawyers World (El Mundo del Abogado) named him one of "Mexico’s Top 100 Lawyers - 2005."

Heather’s first task will be to oversee the proof of claims process to make sure all the creditors’ claims have been properly identified and are valid.  Heather will also oversee Satmex’s financial reporting as agreed upon by the company and its creditors, who are mostly US-based investors.  Mexican law does not require companies undergoing reorganization to make any information available to creditors, which is unacceptable to Satmex’s US investors.

The Mexican government is a shareholder of Satmex, a creditor of a Satmex holding company, a regulator of the satellite industry as well as the owner of the satellite concession that is the key to Satmex’s business.  Both the creditors and Satmex’s shareholders have been frustrated by the lack of progress in the restructuring talks, which is why the Ministry made the bold move of appointing an experienced insolvency lawyer with significant cross-border experience to jumpstart the negotiations.

Court documents indicate that one reason for the breakdown in talks has been the Mexican government desire to include the menoscabo, a conditional indebtedness incurred by Satmex’s parent on behalf of the Mexican government which allowed the new owners of SatMex to leverage their investment in a previously debt-free company.

"All issues related to the complex bankruptcy must be analyzed carefully from each stakeholders’ point of view.  This will be no easy task given that there is a parallel US proceeding in New York, SatMex has several concessions to deal with and the company itself is vital to keeping Mexico operating effectively due to SatMex’s communications purpose.  Resolving the matter is also compounded by the fact that creditors hold both private and publicly placed debt in the US capital markets and the bankruptcy involves a number of complex issues in multiple jurisdictions involving different agencies even within Mexico," said Heather.

White & Case recently was involved in another milestone bankruptcy in Mexico, representing paper conglomerate Corporación Durango, S.A. de C.V. in its restructuring of more than $800 million of unsecured debt, marking the largest reorganization to date under Mexico's new bankruptcy act. 

With more than 150 restructuring and bankruptcy lawyers in 25 countries, White & Case has long been recognized as a leader in complex cross-border insolvencies and workouts such as the Satmex matter.  The Firm is serving as key advisors and litigators in some of the most high-profile restructurings, including Asia Pulp & Paper, SK Global, United Pan-Europe Communications and Mirant, generally regarded as one the of most complex Chapter 11 cases in recent years with pre-petition litigation that includes more than 200 matters with a total value exceeding $20 billion.

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