Argentina’s $16 Billion Debt: Burford Capital Sets Sights on Seizing Assets

Argentina’s $16 Billion Debt: Burford Capital Sets Sights on Seizing Assets

London-based litigation finance firm, Burford Capital, is escalating its pursuit of a staggering $16 billion judgment from Argentina, stating that the South American nation clearly has “no intention” of paying. The firm plans to request permission from US District Judge Loretta Preska on October 16 to initiate the process of seizing Argentine assets. This move comes in the wake of Preska’s order earlier this month for Argentina to pay the award over its 2012 expropriation of foreign investment in oil company YPF SA.

Burford Capital, a litigation funder that purchased the claims of YPF shareholders in 2015, is in line to receive approximately $6.2 billion, the largest portion of the award. The firm asserts that the collection process must commence immediately due to Argentina’s non-cooperative stance, as evidenced by a radio interview statement from an Argentine official declaring the country “does not have to pay” the “completely absurd” judgment.

The History of Argentina’s Debt Disputes

Argentina has a track record of attempting to evade paying judgments handed down by US courts. One notable instance involved Elliott Management, led by Paul Singer, which waged a legal battle for 15 years to recoup money owed to bondholders following Argentina’s 2001 sovereign debt default. Ultimately, in 2016, Elliott and other bondholders reached a settlement with Argentina for $4.65 billion.

This development unfolds less than a month after Argentina devalued its peso, and the financially beleaguered country would struggle to pay a $16-billion judgment. Burford’s Chief Investment Officer, Jonathan Molot, suggested that the firm will employ a different strategy from that of Elliott’s, hinting that “seizing ships is not the best strategy.”

The Implications of Seizing Argentine Assets

The pursuit for asset seizure by Burford Capital sends a clear message about its determination to enforce the $16 billion judgment. However, this move may lead to increased diplomatic tensions and potential legal complications. The seizure of assets is often a last resort in debt disputes, revealing the seriousness of this situation and the lengths Burford Capital is willing to go to secure payment.

Argentina faces significant financial challenges, as it continues to grapple with a faltering economy and devalued currency. A $16 billion judgment is a considerable burden, and the country’s alleged refusal to pay sets a precedent for potential future legal disputes. This situation also raises questions about the role of litigation funders and the impacts of their actions on financially unstable nations.

The outcome of Burford Capital’s pursuit of Argentine assets will be watched closely by international observers, as it could potentially reshape the landscape of international debt disputes and the strategies employed by litigation funders.