Prosecution of Crimes under the Mexican Commercial Insolvency Act Part II

During a Mexican insolvency proceeding, prosecution of several criminal conducts may occur. Such conducts may be attributed to the members of the board of directors, managers, employees and receivers of the insolvent company. The basic criminal conducts are: (i) The intended aggravation of the generalized breach of payment obligations; (ii) The failure to file the accounting information within the term established by the district court; (iii) The request of the acknowledgement of an inexistent or simulated credit.

Unlike a traditional criminal procedure, crimes arising under an insolvency proceeding are prosecuted on a fast-track basis, therefore not being subject to certain rules and timing as regulated by Mexican Criminal Procedural Codes to other criminal investigations and proceedings.

The three main exceptions to a common criminal process are the following:

The criminal court shall have no venue to judge on the damages caused by the criminal conduct.

This characteristic constitutes an exception to the general rule established in any criminal code^[3] in Mexico, including the Mexican Constitution, where it is the duty of any criminal court to decide on the crime’s existence, criminal liability and the payment of damages. Under the CIA,^[4] such powers are exclusively reserved by the Federal District Civil Court, which shall resolve on the insolvency proceeding. The reason for such a provision is due to the fact that a tort action and its indemnification are subject to the terms and conditions of payment of the rest of the obligations under the rules of priority and preemption established in the insolvency agreement and the CIA. Thus under an insolvency proceeding any ordinary action is attracted by the Federal District Court. Notwithstanding the foregoing, note should be taken in the sense that any decision of the Federal District Court shall not affect the course of the criminal actions at all and it is independent to any other sanction such as imprisonment.

Crime prosecution may be brought, regardless of the judicial stage of the Insolvency.

This is an exception to the Mexican general procedural rule, where normally criminal conducts are subject to the final resolution of the main cause of action. That is, certain crimes involving a commercial relationship are subject to the commercial lawsuit results as to confirm or deny certain rights and duties subject to the commercial litigation. The final resolution is the legal basis for the existence of a crime. In such respect, any crime prosecution shall be suspended until the commercial action is terminated. Under the CIA, the filing of a criminal claim can take place at any time and is not subject to the final resolution of the Federal District Court. Evidence in respect of the criminal claim may be obtained from the review of the files of the insolvent company or from any other source. The Federal Public Prosecutor has all the power and authority to obtain evidence from any source, national and international. Based on international cooperation, the Mexican Federal Public Prosecutor may obtain any and all evidence on the persons involved in a criminal claim from any source. Mexico has executed treaties, such as the Inter-American Convention on Mutual Assistance in Criminal Matters of Nassau Bahamas of 1992, also ratified by the United States of America for the obtainment of criminal evidence.

Criminal nature.

Note should be taken that the criminal conducts regulated by the CIA are not federal crimes, but ordinary crimes. However, based on the fact that the law that regulates such crimes is a Federal Law, in order to initiate any prosecution it must be filed directly before the Federal Prosecutor for Federal Special Crimes. These provisions of the CIA constitute an exception to other financial and white-collar crimes that require the prior participation of other authorities, such as the Mexican Ministry of Finance, as provided by the Mexican Banking Law^[5] in order for the Federal Public prosecutor to initiate the criminal procedures.

Specific consent required.

Finally, it is important to outline that a specific consent of the affected party is needed, in order for the Federal Public Prosecutor to initiate a criminal investigation. That is because only an interested or affected party is authorized to initiate a crime proceeding. These crimes are not prosecuted by the mere action of the Mexican government or of the public prosecutor.