UPDATE 1-Vitro says prepackaged bankruptcy approved

* Glassmaker Vitro trying to restructure debt

* Says has support of 650 debt holders
(Adds details on Vitro’s proposal, comments from creditors’
lawyer)

MEXICO CITY, April 11 (Reuters) – A court approved a
voluntary prepackaged bankruptcy for Mexican glassmaker Vitro,
which has been fighting with creditors over its plans to
restructure about $3.4 billion in debt.

Vitro (VITROA.MX: Quote, Profile, Research), which struggled to pay debt amid losses
on derivatives and a drop in business triggered by the global
recession, said in a separate statement that the plan has the
support of 650 debt holders.

The court in Monterrey, where the company is based, ruled
on Friday, but made its decision public on Monday.

The verdict overturned an earlier ruling that rejected
Vitro’s prepackaged bankruptcy plan because it included debt
from the company’s subsidiaries. Vitro had appealed that
decision.

Vitro is proposing refinancing $1.5 billion in external
debt with a combination of new notes due in 2019, convertible
bonds and a cash payment.

The proposal, which implies a 30 percent discount on the
$1.5 billion debt, was rejected by some creditors who have
filed involuntary bankruptcy petitions against the company in
the United States and Mexico.

“The new sentence … does not change the plan or the
rights of the creditors,” said Jaime Guerra, lawyer for a group
of creditors that expects this week to hear the verdict on its
involuntary bankruptcy petition against Vitro.

Friday’s ruling does not prejudge whether or not Vitro’s
subsidiaries will be able to vote on their debt, he said.

Gricelda Nieblas, head of IFECOM, the Mexican agency that
overseas bankruptcies, agreed with Guerra, noting that a judge
will determine which creditors can vote.

Still, in many cases inter-company debt has been
recognized, she said.

Vitro needs the approval of at least 40 percent of its
creditors to proceed with the prepackaged bankruptcy.

The glass maker’s shares fell 1.7 percent to 13.07 pesos in
local trading Monday.

Vitro said last Wednesday that some of its U.S.
subsidiaries were seeking Chapter 11 bankruptcy protection in a
court in Texas and it was selling other U.S. units.
(Reporting by Elinor Comlay and Gabriela Lopez; Editing by Tim
Dobbyn)

UPDATE 1-Vitro says prepackaged bankruptcy approved