Argentina's YPF Stake Dispute: US Government Sides with Argentina, Investors Seek Alternative Collateral

The US government supports Argentina's efforts to temporarily halt a court order to turn over its 51% stake in YPF to investors. The investors, Petersen Energia Inversora and Eton Park Capital Management, argue that Argentina's strategy of delay and obstruction justifies the turnover. If the appeals court denies the stay, the investors suggest proposing alternative collateral or setting conditions to avoid irreversible outcomes during the appeal. Argentina has until July 22 to respond.

The U.S. government has sided with Argentina in its bid to temporarily halt a court order that would require the country to transfer its 51% stake in YPF to investors. The U.S. Second Circuit Court of Appeals in New York has provisionally suspended the order, giving Argentina a temporary reprieve from the share transfer [3].

The dispute dates back to 2012, when Argentina re-nationalized YPF, a move that led to the bankruptcy of two companies in the Petersen Group, which held a 25% stake in YPF. A hedge fund, Burford Capital, bought the litigation rights from these firms and filed a lawsuit against Argentina. The legal argument centered on Argentina's alleged violation of YPF's bylaws, which stipulate that anyone acquiring more than 15% of the company must make the same offer to all shareholders [1].

In September 2023, Judge Loretta Preska ruled in favor of the plaintiffs, awarding them a $16.1 billion compensation for the re-nationalization of YPF. The court ordered Argentina to transfer the 51% stake it holds in YPF to satisfy this judgment [1]. However, Argentina has argued that giving up its controlling stake in YPF could destabilize its economy and has sought to delay the transfer.

The investors, Petersen Energia Inversora and Eton Park Capital Management, have urged the appeals court to deny Argentina's request for a stay, arguing that the country's strategy of delay and obstruction justifies the immediate turnover. They have also suggested proposing alternative collateral or setting conditions to avoid irreversible outcomes during the appeal [2].

The U.S. government, in a proposed friend-of-the-court brief, expressed its support for Argentina's position, stating that the public interest supports resolving the dispute on the merits and free from the "rushed compulsion" of an unstayed turnover order [2]. Argentina has until July 22 to respond to the investors' filing, and the matter will be reviewed by the next available three-judge panel at the appeals court [3].

References:

[1] https://buenosairesherald.com/business/ypf-case-timeline-of-events-since-preska-order
[2] https://ca.finance.yahoo.com/news/us-sides-argentina-ypf-dispute-050230234.html
[3] https://www.investing.com/news/economy-news/us-appeals-court-puts-argentinas-51-ypf-stake-turnover-on-temporary-hold-4136305