Global television network files for bankruptcy facing lawsuit

Mexican television network TV Azteca has filed for bankruptcy protection in Mexico City, seeking to reorganize its business amidst significant financial challenges. The company is contending with a $1.7 billion Mexican tax settlement, payable in installments, and a lawsuit stemming from a $400 million default on unsecured notes. The case is being closely watched by legal professionals as it could set a precedent for how foreign insolvency proceedings impact creditors' rights and litigation in the U.S.

TV Azteca’s financial difficulties began during the Covid-19 pandemic when it ceased making payments on its unsecured notes in February 2021. Subsequent attempts by noteholders to accelerate the debt were met with legal challenges from TV Azteca, including seeking declaratory relief and obtaining an injunction. Involuntary Chapter 11 petitions filed against the network in the U.S. were dismissed, but legal battles continue in both Mexican and U.S. courts.

The Mexican court has initiated a process to determine TV Azteca’s insolvency, and if confirmed, the company will enter a conciliation phase to negotiate debt reductions. The outcome of this case could have broader implications for cross-border insolvency practices between Mexico and the U.S., particularly regarding the restructuring of foreign liabilities and the enforcement of guarantees.

(Source：Thestreet)