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Vitro SAB (VITROA) posted its biggest decline in more than three years, erasing earlier gains that followed the Mexican government’s call for a U.S. appeals court to enforce the glassmaker’s reorganization in the U.S.
The shares tumbled 9.1 percent to 17.20 pesos at the close in Mexico City, the biggest drop since June 2009. Earlier the stock had soared as much as 15 percent and briefly traded at its highest level since 2008. The shares have gained 47 percent this year.
The Mexican government filed papers this week urging the appeals court to reverse an earlier court decision and enforce the reorganization of Vitro in the U.S. Affirming the lower court’s decision and siding with holders of $1.2 billion in defaulted Vitro bonds “may substantially complicate further bankruptcy cooperation between courts in the U.S. and Mexico,” the Mexican government said.
Vitro exited bankruptcy in Mexico earlier this year after a Mexican judge approved its restructuring plan. While the plan is valid in Mexico it’s currently unenforceable in the U.S., after a bankruptcy judge in Dallas ruled in June that the company’s plan was “manifestly contrary” to U.S. policy.
The Mexican government filed its brief with the U.S. Court of Appeals in New Orleans on Oct. 15, arguing that judges should overturn the June ruling.
In general, bankruptcy cooperation between courts in the U.S. and Mexico “has been robust and fruitful for both nations,” the Mexican government said in the brief.
Vitro welcomed the government’s intervention, said Roberto Riva Palacio, a spokesman for the San Pedro Garza Garcia, Mexico-based company.
“We applaud the Mexican government’s desire to see Mexican reorganizations enforced in the United States,” he said.
Donald Cutler, a spokesman for the bondholder group, declined to comment.
To contact the reporter on this story: Brendan Case in Mexico City at firstname.lastname@example.org
To contact the editor responsible for this story: Ed Dufner at email@example.com