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322C H A P T E R X Xmade to conciliate the parties and, if that is unsuccessful, then bankruptcy and liquidationwill follow, although in some cases the parties may resort directly to bankruptcy andcut short conciliation efforts when these are viewed as unrealistic.The reorganization process is one of the so-called universal processes, considered assuch because they involve all of a business’ assets, all the creditors and debtors and, ifapplicable, the liquidation or sale of all of the merchant’s rights and obligations, leavinguntouched by this process only those rights that specific laws categorize as inalienable,exempt from attachment, or not subject to a statute of limitations.Clearly, a law like the Business Reorganization Law covers many highly varied matters,and therefore the following discussion will be limited to indicating the aspects of theLaw we consider most relevant from a legal point of view and which are of particularinterest to business operations. In this regard, it is important to address issues such asthe persons to whom the Business Reorganization Law applies, the entities that participatein the reorganization process, the persons authorized to initiate it, the statutorypremises of business reorganization and its stages, and the special protection providedto creditors.2. The Business Reorganization Law2.1. Persons Subject to the Business Reorganization ProcessThe Business Reorganization Law governs the insolvency of and payments to creditorsby individuals or entities who qualify as merchants in accordance with the CommerceCode (Código de Comercio). The law also governs trust assets that are used in businessactivities, as well as the Mexican branches of foreign businesses, with the understandingthat in this last instance, the reorganization process will only govern assets and rightslocated within Mexican territory.Individuals or entities that are not merchants, or merchants that have current and outstandingdebts that altogether do not exceed the equivalent of 500,000 investment unitsup until May 15, 2005, or 400,000 investment units after that date, will not be subjectto the Business Reorganization Law, unless these “small businesses” expressly agree to begoverned by it in writing.2.2. Entities Involved in the Business Reorganization ProcessDistrict judges with jurisdiction in the merchant’s domicile are competent to handle thebusiness reorganization process and they will be the central authority and director of thereorganization proceeding. The Business Reorganization Law also provides for the participationof business administration specialists who will assist the judge in decision-