Unless agreed otherwise between the parties, a license agreement should remain valid during an insolvency proceeding. The conciliatory authority, however, is allowed to oppose the fulfillment of an agreement if it believes that this will benefit or protect the debtor's estate value. Additionally, any person who signed an agreement with the debtor has the right to ask the conciliator if said authority will oppose the fulfillment of the agreement. If the conciliator does not oppose, the debtor will be forced to comply with the agreement or guarantee the compliance of its obligations; however, if the conciliator opposes, this will give the other party the right to cancel the agreement immediately.
During the bankruptcy or liquidation stage, only the agreements or obligations that are essential for the ordinary operation of the enterprise shall remain valid.Once an insolvency proceeding is initiated, during the conciliation stage, debtors are generally allowed to continue having control of its business administration, although the conciliator may ask the judge to remove the debtor and take over the administration of the company. Under this circumstance, the conciliator is expected to administer the business as if it were its own, performing all the debtor's obligations (including those under a license agreement). However, should a conciliator believe that this will benefit or protect the trader's estate, they are allowed to oppose the fulfillment of a license agreement.
During bankruptcy, the management of the company is undertaken by the trustee or executor of the bankruptcy.The best way to protect the licensee's interests is by recording the license agreement before the relevant IP authority. This registration will prevent the licensee from being considered an infringer in the case of continuing to use or exploit the IPR during and after an insolvency procedure. Additionally, it is advisable to include a special clause within the license agreement, which assures the licensee any type of benefit in connection with the licensed IPR in case an insolvency proceeding is initiated, e.g., either a purchase preference order or any other type of guarantee in the licensee's benefit.
The Mexican Insolvency Act provides that all preparatory or definitive contracts pending execution must be fulfilled by the debtor, unless the conciliator opposes per the best interest of the insolvency estate. When the conciliator is in charge of the administration or authorizes the execution of the pending agreements, he/she can avoid the separation of goods, or demand their delivery, paying the corresponding price.
Another alternative, if insolvency arrives, would be to file for an insolvency proceeding with a restructuring agreement, which is a mechanism according to which a debtor that is in imminent default on the payment of its obligations and creditors holding defaulted and unpaid obligations representing the majority of the total obligations of the debtor, may file the petition of insolvency together using a reorganization agreement previously agreed upon. This is subject to approval by the judge and the recognized creditors of the debtor during the conciliation period.