Tuesday, April 16, 2024

ARGENTINA | 11-01-2024 17:12

Blow for Argentina as US court rules against nation in YPF nationalisation case

US Judge Loretta Preska rejects the motion for extension by the government and confirms January 10 was deadline to provide guarantees; Plaintiffs can now seek seizure of assets for compliance.

Argentina has received a damaging court blow after a US judge ruled against the nation in a case related to the 2012 controversial nationalisation of state energy firm YPF SA.

New York Judge Loretta Preska did not admit a new request for an extension, filed on Monday through a letter drafted by law firm Sullivan & Cromwell LLP, which represents Argentina in the case for the nationalisation of 51 percent of the shares in the state-run oil company during Cristina Kirchner’s administration, from Spanish company Repsol.

In her answer, the magistrate asserted that even if “she sympathises with the scale of the financial challenges” facing the country, it is “a proven fact” that the Executive Branch “has not taken, and supposedly cannot take, any measures to complete the payment and has no schedule to do so”, which is what led her to make the decision.

On September 15 last year, the magistrate ordered Argentina to pay US$16.1 billion to two companies with shares in YPF that had not been compensated after the nationalisation of the oil company in 2012, when it was under the control of Spanish company Repsol.

Last December Argentina’sPresident, Javier Milei acknowledged that the country does not have the necessary funds to post a bond to the Manhattan court, but said: “We are willing to pay.”

“The Republic argues that the ‘terrible economic circumstances, including widespread poverty, the renegotiation of credit lines with the International Monetary Fund, the incapacity to access international capital markets and inflation now nearing 200 percent’ discourage me from admitting the plaintiffs’ motion. Even though the court sympathises, the Republic’s own admission of lack of access to funds disproves its argument”, the document added.

After this determination, Burford Capital, which purchased the right to litigate from the Petersen Group: Petersen Energía Inversora and Petersen Energía, Argentine companies which held 25 percent of the shares, is in a position to request liens in the total amount of US$16 billion.

Regarding which assets could go “in the bag” of the fund’s requests, whose CEO and founder is the former vice-president for Legal Affairs of Time Warner, Christopher Bogart, heading an army of 350 lawyers and legal experts, Sebastián Maril stated that “everything owned by the state may be attached.”

“I don’t rule out any commercial agreement, such as the export of gas, which generates royalties in dollars, may be attached. Patents, Aerolíneas Argentinas aircraft owned by the state, among others. These people have teams conducting recovery work, and are experts in finding assets,” the CEO of Latam Advisor told Perfil.

However, he clarified that this does not necessarily mean that on Thursday, January 11, the attachments will start but they may already be enforced.

This explains why, on Thursday, the state-run oil company itself announced the placement of Negotiable Bonds to the tune of US$800 million, in what represents its first foray into the international market in four and a half years, backed by exports, since, as explained by Maril, “oil royalties are safe from any attempt at attachment by the beneficiaries of the ruling in the expropriation case.”




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