Recovery of Debt in Mexico

February 26th 2020

We received a telephone call from the Credit Manager of an international branded clothes business.

They had a debt of £120k with a major retailer in Mexico City.  Despite their best efforts, they had been unable to obtain settlement.

In Mexico the legal process can be long winded and expensive.  It is generally accepted that most proceedings for the recovery of debt will take approximately one year, without adding any appeal processes.

The matter was urgent as investigations revealed that the Mexican Government had also issued proceedings in the courts for unpaid taxes.  A different strategy was required.

We contacted local agents, previously used by us, and within three hours we had their representatives at the retailer walking round and to all intents and purposes doing a stock take.

The retailer was a sole distributor of our client’s products in Mexico, and as such had large signs both inside and outside the premises with our client’s logos and brand names.  We ensured the retailer was aware that they were now in breach of contract and not only would we remove all of our goods but we would also insist on the removal of all signage.

There followed a long procession of calls and emails between us, our agents and the retailer.  Within three weeks of instruction to us, our client had received payment in full.  This demonstrates how a pure legal process in a foreign country may not be the best option, and very often may be the lazy option.

We are unaware how long it took for the Mexican Government to get paid for their claims.