Alejandro Sainz O is distinguished by his leading expertise in restructurings, work-outs and bankruptcy matters.
Alejandro Sainz was the founding partner of Cervantes Sainz which was spun- off into Sainz Abogados. He chairs the Restructurings and Insolvency practice area and is a member of the Finance, Compliance & Investigations, and Mergers and Acquisitions practice groups at Sainz Abogados. He has more than 30 years of experience advising and representing clients in the practices of cross-border Insolvency and Restructurings (out-of-court & in-court – concursos mercantiles), Finance, Refinancing and Corporate Reorganizations, as well as in the purchase & sale of assets in special situations and distress.
How has your restructuring and insolvency practice developed over time?
Our firm has many years of experience advising and representing clients in cases of cross-border insolvency and restructuring (both out-of-court and in-court proceedings - concursos mercantiles), finance, refinancing, and corporate reorganisations.
In 2007-2008, the subprime mortgage crisis hit Mexico importantly. Difficulties in the U.S. financial markets increased the number of material risks in the operations, results and financial situation of many Mexican companies. When the mortgage crisis weakened the U.S. economy, it came with the plummeting of the Mexican peso. Overnight, many companies saw their dollar debt grow significantly and found themselves risking bankruptcy. As a result, the demand on legal advice in restructuring and bankruptcy matters increased, and we were ready to take over this challenge.
Since then, we have represented most of the relevant Mexican cases in insolvency such as Grupo ICA in their cross-border restructuring and concurso proceedings; the ad-hoc committees of noteholders in the cross-border insolvency proceedings of Corporación Durango, Grupo Cementos Chihuahua, Comercial Mexicana, Vitro, Maxcom, Hipotecaria Su Casita, Homex, Grupo Idesa, Oro Negro, Oceanografía and Crédito Real, Unifin, Mexarrend, etc. ; Grupo Sare, Copamex, and Grupo Javer in their out-of-court cross-border restructuring proceedings; Grupo Aeroméxico and subsidiaries and TV Azteca in their cross-border Chapter 11 restructuring procedure.
The collective expertise of Sainz Abogados’ lawyers spans 22 practice areas. How important is collaboration across disciplines for restructurings?
Very important. Our practice is recognised by clients and peers as one of the few with sophisticated transactional and litigation cross-border capabilities, out-of-court and in-court. Through a combination of transactional and litigation expertise, the firm is able to provide unique and accurate restructuring services to domestic and international clients.
Restructuring and insolvency are complex processes that involve capabilities on financial, labour, tax and corporate matters as well as on negotiation, and mediation. Our multidisciplinary approach and the collaboration among areas within our team has led to successful results and has set the firm apart from others.
You are commended for your history of pro-bono work. What is a pro-bono case you are especially fond of and what impact did it have on the community?
Sainz Abogados is a signatory of the "Pro Bono Declaration of the Americas" and of the Pro Bono Mexico Standards. In compliance which such standards, we established a pro bono program for all our lawyers and trainees to provide free legal advice and representation to communities, non-profit organisations, social enterprises, micro-entrepreneurs, low-income sectors or individuals, and other priority groups. We receive work from two clearing houses, the Mexican Pro Bono Center and Appleseed Mexico, and have a pro bono committee to select and distribute work. I’m proud of this program and lawyers’ commitment with pro bono efforts.
What are the most common pitfalls faced by restructuring and insolvency practitioners and how may they be avoided?
Corporate restructuring and insolvency matters are always complex. Many difficulties appear and it takes a great deal of senior management's time as relevant decisions are made every day.
Each case is unique, and the complexities are industry and country specific. In court or out of court negotiation among stakeholders is a vital factor as the lack of it can prolong restructuring and result in avoidable costs and even the liquidation of debtors.
The big challenge for practitioners is going from strategy to implementation. It is important to identify the underlying causes of the liquidity problem, think of specific requests and have a solid negotiating strategy. It is also important to be mindful of the impact of such strategies and acknowledge that many of the solutions proposed and outcomes will be out of the company´s and its advisors’ control.
In the aftermath of the pandemic and global market fragmentation, Mexico should focus on improving the investment environment and implementing major policy efforts to get the better of the current situation and assist businesses to thrive and survive this time where there will be numerous opportunities for the insolvency and restructurings practice.
In the coming months and years, insolvency lawyers and turnaround specialists in Mexico will be focusing on mitigating the external impacts, finances and disputes. Advisers know they will have to provide, more than ever, creative and agile strategies to adopt responsive actions to present and future threats.
Does representing creditors versus debtors during bankruptcies/restructurings draw upon a different skill set?
Each has its own challenges. When faced with debtors, suppliers, lenders, landlords or any other creditor the legal advisor needs to move fast to assess their clients’ interests, expectations and positions and formulate strategies to minimise exposure. Experience in any case is relevant as it will allow the provision of a realistic assessment of the situation, risks, costs and the possibility to succeed.
How much of your work consists of mediating debt-related disputes? Do you think mediation should always be considered prior to litigation?
Mediation plays a key role in restructuring and insolvency matters, both in and out of court.
We believe that negotiation and mediation is the most relevant element to build trust and reach a successful restructuring. Assertive and prompt communication with creditors and among stakeholders most of the times create a constructive dialogue. Debtors should explain their situation and objectives and provide relevant and accurate information. On the other hand, creditors should provide feedback and communicate their concerns effectively.
Negotiation skills are a challenging and complex task that require the experience, preparation, and compromise of legal advisors.
What are recent developments in the Mexican legal market that have affected the restructuring and insolvency practice area?
Mexico, like many other countries, is still recovering from the consequences related to the global covid-19 pandemic and many businesses are still finding it difficult to stay afloat with new economic, political, and social challenges ahead.
Insolvency and bankruptcy play very different roles for large and sophisticated corporations compared to small businesses. Large players may be able to turn to insolvency or bankruptcy for protection, while small ones often only see this as a last resort alternative. Insolvency protection is expensive, complex and intense for small debtors. Furthermore, sophisticated creditors may even choose, if possible, to commence proceedings in US courts (Chapter 11 proceedings) instead of Mexican courts.
However, debtors and creditors have gained experience in insolvency matters as they responded to corporate crisis in the pandemic. We have also seen that creditors have become more open to negotiations after seeing and experiencing the hardships of some recent insolvency proceedings, forcing a re-thinking of out-of-court alternatives and restructures.
The creation of the first two courts specialised in insolvency and commercial bankruptcy proceedings was initially encouraging, but so far it has failed to meet the expectations as the courts have been facing many systematic and structural challenges. There is still a road ahead to evaluate the full effects of this initiative, but we continue to see this change as beneficial and necessary to begin providing legal certainty and relief to businesses and creditors.
Looking ahead to 2024, the insolvency landscape in Mexico will likely start seeing a rise in proceedings due to the current economic and political situation and the tighter financing conditions, which will become a significant challenge for those business that increased their debt during the pandemic.
After 30-plus years in the field, what has been your proudest professional achievement?
We have participated in the most relevant restructuring, insolvency and bankruptcy cases in Mexico and have represented and advised many others regarding Mexican companies in foreign jurisdictions, such as Aeromexico, which was a great restructuring challenge due to its complexity, and its economic, social, and political importance. However, my proudest professional achievement is that I have built a unique, solid and experienced team of professionals that are experts in these matters and with which I have been working for over 15 years creating strategic and innovative solutions for our clients.