Setback for TV Azteca: Court revokes precautionary measures; must pay $580 million

MEXICO CITY (apro) .- A federal court has overturned the provisional measures issued by a civil judge that allowed TV Azteca to avoid collecting a $580 million debt it owes its foreign investors.

On October 22, the Tenth Collegiate Court of Civil Matters of Mexico City unanimously approved Judge Juan Jaime González Varas's proposal to grant an injunction to The Bank of New York Mellon and its subsidiary London Branch against the precautionary measures granted to TV Azteca.

These measures prevented the company, owned by Ricardo Salinas Pliego, from collecting debts owed to foreign investors and opened the door for Mexican state financial institutions to intervene if a judge orders a freeze or seizure of assets.

In the session, Judge González Varas explained that, in May 2022, The Bank of New York issued a notice of early termination of its bond issue contract with TV Azteca because the television station breached the contract.

Consequently, Sallinas Pliego's company initiated a commercial proceeding alleging that the conditions of the COVID-19 pandemic placed it under a fortuitous event and force majeure that prevented it from punctually complying with the notice and conditions agreed upon with the foreign bank. It requested the annulment of the notice issued by the financial institution, the restructuring of the debt, the restructuring of the contract, and the suspension of payments.

By admitting TV Azteca's lawsuit, the civil judge ordered the provisional suspension of the company's contractual obligations with The Bank of New York and its subsidiary.

To this end, the television station posted a guarantee of nearly one million pesos, suspending the issuance of bonds worth $580 million and, as a result, blocking financial institutions from initiating proceedings against it to enforce the contract.

In its ruling, the Collegiate Court determined that it was illegal to determine that the guarantee posted by TV Azteca was sufficient to suspend all of the company's obligations to its investors.

Therefore, the judges agreed to grant the injunction to annul the precautionary measures ordered by the civil judge in favor of TV Azteca.

In his statement, the reporting judge explained that in this case, he applies jurisprudence issued by the First Chamber of the Supreme Court, which establishes that criteria such as the appearance of good faith and the danger of delay, used by the judge to justify the measure he granted to TV Azteca, are inherent to the suspension of an amparo, but not inherent to commercial matters.

"This resulted in the precautionary measure granted being excessive and lacking in precision," González Varas stated.

"Precautionary measures in commercial matters must be limited to preserving the existing de facto situation. It is not possible to suspend compliance with agreed obligations in a generic or indefinite manner, and what must be provided for is that there is no indefinite effect on validly executed contracts."

Regarding the argument of unforeseen circumstances and force majeure due to the COVID-19 pandemic, the rapporteur noted that in 2024, the Court issued another ruling establishing that the global emergency caused by the virus does not justify breach of contractual obligations.

"The COVID-19 pandemic does not, in itself, constitute a case of force majeure or fortuitous event that justifies the breach of contractual obligations, much less the unilateral modification of agreements entered into between parties," he said.

"The right of access to justice cannot be restricted by preventive measures that are broad, generic, and that effectively prevent any of the parties from exercising their corresponding rights."