In the second of a series of four stories, IFLR digs
into the state of debtor in possession (DIP)
financing in Latin America, here with reference to Mexico. DIP
financing is funding for a debtor which ordinarily comes in the
form of secured notes or loans. It’s designed to
inject liquidity and aid in covering expenses and operations
during a restructuring.
Technically speaking, debtor in possession (DIP) financing
is not new in Mexico. But it wasn’t until
Mexico’s insolvency law – the ley de
concursos mercantiles – was reformed in 2014 that
a form of workable clarity on DIP was achieved.
As such, DIP financing in Mexico is only just beginning to
materialise, with the recent homebuilders’ cases
the most prominent to date. Challenges remain however: faced
with a number of disincentives, lenders haven’t
been willing to take the practice up. Compared with the more
predictable US, there’s still...