Click court ruling might spell end to Mexicana agony

Madrid
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Mexicana may finally enter the final phase of its bankruptcy process, after a civil court declared its suspension by a bankruptcy judge in January 2012 illegal.

The Third Superior Civil Court of Mexico City declares that the "suspension of the... bankruptcy procedure is illegal", ordering the airline's reactivation and establishing that its "reconciliation process" must "not exceed one year", according to the ruling that was made public on 12 April.

While this ruling initially only affects Mexicana's low-cost subsidiary Click, it is expected that the court order will soon be expanded to Mexicana itself.

Nearly three years after its grounding and numerous failed relaunch projects, the civil court decision might spell an end to its attempts to preserve the corporate integrity of the airline that are aimed at helping it find an investor willing to finance its relaunch. This was the original intention of the suspension of the bankruptcy process.

Once Mexicana and its subsidiaries re-enter the bankruptcy process, creditors will be allowed to negotiate the payment of debt with the court appointed administrators, which could eventually be a first step towards the final liquidation of the airline.

Mexicana was close to celebrating 80 years of service when its cash reserves dwindled following major international expansion projects and increasing domestic competition. This forced the airline to ground all operations in August 2010.