Multi-million dollar legacy YPF lawsuit: Winners want to negotiate, accept bonuses, and extend deadlines

The winners of the YPF expropriation lawsuit, including Burford Capital and others, are willing to negotiate with Javier Milei 's government. They know that despite the two rulings by U.S. Judge Loretta Preska , collecting payments in cash or shares is not a simple task. In fact, they consider it impossible.

Although it prefers not to discuss the lawsuit, Burford Capital is willing to discuss a payment plan with Argentina . Analysts close to the negotiations claim that the private fund charged with litigating against Argentina is willing to accept bonds and extend payment deadlines. The government's first response came in the form of an assurance that it will appeal the measure.

Preska first ordered Argentina to pay US$16 billion , and yesterday he announced that, starting today , the country has 14 days to surrender 51% of the oil company's shares to make the payment.

The government has said it will appeal the ruling. The winners of the lawsuit, the Burford Capital fund, want to negotiate. The government knows this.

With the YPF lawsuit hanging over its head, the government is finding its way out of a difficult situation, even though it has already decided to appeal. One thing is clear: Argentina doesn't have the money to pay. Just to give you a guideline, it's not enough to cover such a debt even with all the funds from the latest agreement with the International Monetary Fund (IMF) .

Argentina can negotiate and reach a payment agreement. That agreement must be signed by the relevant officials. The question is whether those officials, if necessary, will sign it, or whether they prefer to brush the case aside and continue to drag out the story to avoid any personal liability.

The trial in question is for the renationalization of the oil company, which has, among other consequences, a significant addition: the US$16 billion sentence is compounded by US$2 million in daily interest.

The issue at hand is not whether Argentina had the right to expropriate the company or not, nor is it an issue of Argentine sovereignty. Rather, the litigation is for the failure to carry out the Public Acquisition Offer required by YPF's bylaws ; an omission that harmed the rights of creditors who bought the shares in New York - where YPF is listed - and which therefore gives rise to the litigation taking place in New York . In fact, this litigation arises from the failure to fulfill a promise made by the Carlos Saúl Menem government in 1993 , when it went to Wall Street to privatize the company, raising US$ 1.1 billion under the laws and regulations of the United States capital markets.

Many players appear in the story leading to YPF's renationalization . A key player is the Petersen Group , which previously acquired 25% of YPF with funds borrowed from Repsol ( YPF 's then-owner); and a group of international banks, including Credit Suisse, Goldman Sachs, and Citibank.

With Petersen as a shareholder, Cristina Kirchner's government decides to expropriate YPF.

Law No. 26,741 on Hydrocarbon Sovereignty , approved in May 2012 , allowed the Government to expropriate 51% of YPF shares from Repsol.

When Petersen acquired the shares, he promised to pay them with dividends from his shares in the oil company. But when YPF was nationalized, the company banned dividends, which led Petersen to bankruptcy due to his inability to pay the banks.

The YPF trial begins in 2015. And it is here that another important player to this day begins to play: Burford Capital .

The bankruptcy of the Petersen Group companies fell to the Commercial Court No. 3 of Madrid, which appointed a trustee and auctioned off the right to litigate.

At the public auction, Burford Capital, a company that buys lawsuits and then finances litigation, was chosen by the trustee because Petersen lacks the necessary resources, capital, and experience.

To pursue an expensive, complex, and lengthy lawsuit. Burford is also funding the lawsuit for Eton Park (a New York investment firm). Petersen and Eton Park were the second and third largest investors in YPF, respectively.

Burford won the auction and was appointed by the Spanish court to manage and finance the litigation. However, Burford did not purchase the claims and does not own them.

After eight years of litigation, the U.S. District Court for the Southern District of New York granted summary judgment on liability against Argentina, recognizing that it is essential for parties to honor their contractual promises, especially when dealing with foreign governments and international capital markets.

In September 2023, Judge Loretta Preska issues a final judgment against Argentina for approximately US$16 billion ( $14.3 billion for Petersen and US$1.7 billion for Eton Park). Now, the same judge says the state must pay the judgment with 51% of YPF's shares.

The issue of lawsuits facing the country is no longer a surprise. It's a recurring theme in the business world when it comes to Argentina . These lawsuits, which the country faces internationally, hamper more than one investment, according to lawyers, businesspeople, and analysts.

Javier Milei's former chief of staff, Nicolás Posse, said in the Senate in 2024 that Argentina was facing more than 264,000 lawsuits , and that only 20% had a fixed amount. That percentage totaled US$12.554 billion .

This figure includes claims being processed before the International Centre for Settlement of Investment Disputes (ICSID), the corporate arm of the World Bank .

The lawsuits against the country range from claims for the loss of concessions, administrative negligence, the nationalization of the Retirement and Pension Fund Administrators (AFJP), and also expropriations.