“Almost every family in Monterrey has had someone who has worked at Vitro,” Garcia shouts above the hammering of presses and the whoosh of molten glass being fired into bottle-shaped molds.
The whir of activity gives no indication that Vitro has been fighting its way through Mexican and U.S. courts — or that it’s waging a bare-knuckle brawl with a number of hedge funds, including Paul Singer’s Elliott Management.
Silver-haired investor Singer, whose New York hedge fund had more than $20 billion in assets as of June, swooped in in 2010, more than a year after Vitro’s February 2009 default on $1.2 billion of bonds.
Singer, who’s adept at profiting from the debt of floundering companies such as Lehman Brothers Holdings, snapped up Vitro’s bonds at a discount. Then he sued to be paid in full, countering Vitro’s proposed debt restructuring that offered outside creditors about half of their original investment.
In lawsuit after lawsuit in Mexico and the United States, Elliott and other hedge funds have challenged Vitro’s bankruptcy and sought to seize the glassmaker’s American assets and revenue from customers that include Ford Motor Co.
“Paul Singer’s not afraid to do the work on situations that frankly scare a lot of people off,” says Kenneth Buckfire, chief executive and managing director of Miller Buckfire, a New York-based investment bank that has restructured bankrupt companies.
Singer, a Republican power broker who has given $1 million to presumptive presidential nominee Mitt Romney’s super PAC, might have prevailed but for Vitro chief executive Hugo Lara.
“We started this process with a conviction that we had a business, a legacy and jobs that we were ready to defend,” Lara says. Urged on by Vitro Chairman Adrian Sada, the company founder’s great-grandson, Vitro has gone toe to toe with Singer.
In May, a Mexican appeals court ordered Elliott and other funds to pay Vitro’s legal expenses on some lawsuits that courts have dismissed.
Vitro’s reorganization was approved by a court in Mexico earlier this year over objections by bondholders who have appealed. Because Vitro has units in the United States, it asked a Dallas court to enforce its Mexican restructuring under U.S. Bankruptcy Code Chapter 15 — which applies to cross-border issues — in an effort to stop litigation by debt holders such as Singer.
On June 13, Judge Harlin “Cooter” Hale denied Vitro’s request, saying the Mexican plan was defective because it didn’t sufficiently protect interests of U.S. creditors.