Durango obtains extension to protection from lawsuits

By Jeff Pines

Washington, June 7 - Corporacion Durango SA de CV obtained an extension to its protection from creditor lawsuits in U.S. courts. A hearing was held Friday and an order extending Durango's immunity was filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

The injunction ends June 30 unless the court extends it.

U.S. law allows a foreign-based firm to reorganize under its host country's laws and obtain protection from lawsuits in U.S. courts while doing so.

Accounting firm Grant Thornton LLP objected to Durango, a Mexican paper and containerboard company, getting an extension. It said Durango wants protection from being sued while it sues Grant Thornton. In effect, Durango would be using the U.S. Bankruptcy Code as a shield and a sword, the accounting firm said in its objection.

Durango alleges Grant Thornton did a shoddy job of checking the financials of a company Durango bought.

Durango filed for bankruptcy protection in U.S. courts on May 21. Its Chapter 11 case number is 04-13487.

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