AHMSA drama deepens as drawn-out bankruptcy slowly progresses

Last month, AHMSA opened its doors to potential buyers as part of its ongoing bankruptcy process. While there is still no news about when an auction of AHMSA’s steelmaking and MINOSA mining assets will occur, the drama surrounding the bankrupt steelmaker continues.

Various media reports have named ArcelorMittal and Ternium as two of the primary parties interested in purchasing AHMSA’s steelmaking and/or mining assets. That makes sense considering they are the two other major flat-rolled steel producers in Mexico. Neither company had responded to an SMU request for comment as of press time.

The CEO and the stolen tin

AHMSA ceased operations late in 2022 and filed for bankruptcy in 2023. Since then, there have been various reports of looting, theft, and asset stripping at the steel mill in Monclova and at its MINOSA mining subsidiary. Both are in the state of Coahuila in northeast Mexico.

Bankruptcy trustee Victor Manuel Aguilera has previously acknowledged that some “non-essential” assets, including scrap and coal, had been sold. He said it was necessary to maintain the mill’s equipment for a future restart.

Well, now at least one theft, or at least a disappearance, has been confirmed. Various reports in the Mexican media show that a former AHMSA CEO was facing criminal charges for the disappearance of 9,415 metric tons of tin from the mill.

An April 2024 inspection listed the tin, valued at 9,790,091 pesos (~USD$532,500), as stored on the AHMSA property. But during a later inspection, just three months later, the material was nowhere to be found, according to a local media report.

Grupo Afirme charged former AHMSA CEO Luis Zamudio Miechielsen with a breach of trust. It said Zamudio was the “licensed warehouseman” responsible for keeping the material safe, per a storage contract.

Zamudio pointed out that he was the one who reported the theft in 2024.

His attorneys also argued that the contract specified his responsibility for the safekeeping of machinery and coal, but not tin, said one report.

On Wednesday, Oct. 15, a judge exonerated Zamudio. He ruled there was insufficient evidence to prove Zamudio’s criminal responsibility or direct involvement in the theft.

“There is a theft of that material, but we don’t know who stole it,” Vanguardia reported the judicial authority as stating.

A former union leader is calling for a deeper investigation into the theft.

“If they say it wasn’t Zamudio, someone else did. There’s no doubt about that,” El Tiempo Monclova quoted Ismael Leija Escalante as saying. “Someone took that material, and it can’t be left like that. Because if they took that, who knows what else they’ve taken.”

The OEM distributor strikes back

Meanwhile, Maquinas Diesel SA de CV (Madisa, also known as Madisa CAT) has accused Aguilera of irregularities in the bankruptcy process and acting against the interests of creditors and workers.

One local news report said Madisa discovered at least one suspicious payment of 2 million pesos (USD$108,475) to the trustee’s own lawyers.

Madisa is one of the largest distributors of Caterpillar machinery and equipment in Mexico, with branches throughout the country. On AHMSA’s list of creditors, it is reportedly owed 220 million pesos (USD$11.9 million) for unpaid machinery and equipment.

AHMSA in the trustee’s corner

AHMSA released a statement defending the actions of the bankruptcy trustee.

“Receiver Victor Manuel Aguilera Gomez has performed his duties in accordance with the legal mandate, without exception,” AHMSA said in an Oct. 14 statement.

Following the law, Aguilera informed the court about the sales of non-essential minor assets, the company stated.

It said the process was “carried out with complete transparency and under the established guidelines, with the sole purpose of covering the minimum expenses necessary to preserve the essential assets of AHMSA and MINOSA, in order to preserve their value.”

Back pay blues

In the meantime, thousands of AHMSA steelworkers continue to suffer.

They’ve gone nearly two years without pay while receiving nothing but assurances from the company and government officials. Workers have lost faith in the company and are angry that those responsible for this disaster are going unpunished.

Former workers told Vanguardia that the tin theft scandal is just a smokescreen to stall worker settlement payments and delay any resolution to this drama.

Workers have provided evidence of deposits made to the trustee and his companies to federal authorities, according to the report. “The government has all the evidence, but nothing is happening,” one former worker lamented.

Bankruptcy still processing

The window for creditor comments in the bankruptcy case has closed. AHMSA announced on Monday that the court is now pressing for a full accounting of the proposed valuation and asset sale. The judge’s order requires the company and trustee to provide a full, itemized response addressing objections and clarifying the viability of the plan.

At the same time, AHMSA said the court is working with a federal labor defense attorney to review labor claims to ensure workers are paid as preferred creditors, ahead of other obligations.

While the court hasn’t set a public deadline, the next phase hinges on AHMSA delivering a full accounting of its asset sale proposal – timing that could shape the pace of restructuring talks.