Dos Republicas Coal Partnership’s Mexican Sister Company, AHMSA, files for Chapter 15 Bankruptcy in United States

By: Jose G. Landa, Eagle Pass Business Journal, Inc., Copyright 2016

Dos Republicas Coal Partnership’s Mexican sister company, Altos Hornos de Mexico, S.A.B. De C. V. (AHMSA), of Monclova, Coahuila, Mexico filed for Chapter 15 protection of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on or about August 16, 2016.

Dos Republicas Coal Partnership, however, is not in bankruptcy.  Dos Republicas Coal Partnership is the owner of the controversial open surface coal mine known as “Eagle Pass Mine” in Eagle Pass, Maverick County, Texas on the U.S.-Mexico border.  Rather, its Mexican sister company, AHMSA, filed a petition seeking protection under Chapter 15 of the U.S. Bankruptcy Code in Delaware.

According to the website of Dos Repbulicas Coal Partnership, both Dos Republicas Coal Partnership, a general partnership in Texas owned by two Texas limited liability corporations who are wholly-owned by Mexican company Minera del Norte, S.A. (MINOSA), and AHMSA are subsidiaries owned by the Mexican parent company known as Grupo Acerero del Norte, S.A. (GRUPO GAN).

AHMSA is one of Mexico’s largest integrated steel producers based in Monclova, Coahuila, Mexico, which also owns it own iron ore and coal mines.  AHMSA’s Chapter 15 Bankruptcy petition was filed by its court approved foreign representative, Francisco Xavier Gaxiola Fernandez, in Delaware on behalf of the company.

AHMSA has been in bankruptcy-style proceedings in Mexico for over 17 years with over $1.7 Billion in debts owed to over 900 creditors, many of whom are the largest financial banks in the U.S.and Great Britain whose debts have been reduced to minuscule amounts by the Mexican legal proceedings.  All debts owed by AHMSA to American and British creditors were reduced to the Mexican monetary unit-Pesos- and interest accrual on the debts were ended, generally reduced to a few pennies on the dollar of the debts owed.  Many American and British creditors complained about the unfairness of the Mexican debtor or bankruptcy-style proceedings, but their pleas fell on deaf ears.

AHMSA seeks to have the U.S. Bankruptcy Court approve its Mexican bankruptcy general payment agreement or restructuring plan approved by its creditors in the Mexican debtor proceedings as a foreign main proceeding and give full effect and force in the U.S.as a Lifting Order and enjoining all parties from commencing or taking any action in the U.S. to obtain possession of, exercise control over, or assert claims against AHMSA or its assets in the U.S. in contravention of the Restructuring Plan approved by the creditors and Mexican court in Monclova, Coahuila, Mexico.

AHMSA has significant assests in the U.S., including AHMSA International, Inc., which distributes flat-rolled steel in the U.S., Mexicans and Americans Trading Together, Inc., and over $20 Million in cash in a Delaware financial institution.

It is unknown whether any American and/or British creditors of AHMSA will file objections to its Chapter 15 Bankruptcy Protection Petition in Delaware.  Reportedly, American and British creditors of AHMSA lost billions of dollars in the Mexican debtor proceedings.