What’s New, Buenos Aires?

Inside Argentina’s Courtroom Tango

Not since Eva Peron has there been such drama in Argentina. Former shareholders in the state-controlled oil company, YPF, were recently awarded a massive $16 billion in a court judgment. And now, they're on a mission to make Argentina cough up the cash for seizing their stakes.

This isn't the first time Argentina has been through this kind of ordeal. Remember the infamous case with Elliott, the hedge fund? It took them about 15 years to settle that one, involving a naval vessel seizure and all. But eventually, they reached an agreement in 2016 during the Macri administration.

Now, the battle to enforce the judgment in the YPF case is heating up. The plaintiffs accused Argentina of playing "brazen procedural gamesmanship" to block their recovery efforts. They're not holding back in their legal filings, that's for sure.

Interestingly, Argentina's current president, Javier Milei, has completely different political views from the previous administration. He's all about privatizing YPF and other state-owned companies. But he's also open to paying up if Argentina's appeal against the judgment doesn't go their way.

The tension between Argentina and its former investors is palpable, as court documents reveal. The plaintiffs requested permission to examine Argentina's state-owned assets. They argue that certain supposedly independent companies, like the state-owned airline Aerolíneas Argentinas and the telecommunications company Arsat, are actually just puppets controlled by the government. They want to prove that these entities are not separate from the state but are "alter egos" of it. It's a legal strategy to potentially make it easier for creditors to seize these assets.

On the other side, people close to the Argentine administration are confident that higher courts will provide them with a reprieve. They believe the plaintiffs are on a fishing expedition to embarrass the country and that there aren't any valuable assets within the US's jurisdiction up for grabs anyway.

It's not just about YPF or the state-owned companies, though. The plaintiffs are also eyeing the central bank and the country's largest retail bank, Banco Nación. They want access to accounts used for foreign trade transactions. But Argentina argues that central bank reserves, including those held at Banco Nación, are immune from seizure.

This legal saga isn't just causing tension but also affecting other aspects of Argentina's economy. For example, the price of YPF's New York law-governed corporate bonds could potentially collapse if YPF is considered an alter ego of the state. That's a risk that the plaintiffs hope will push Argentina to the negotiating table.

It'll be interesting to see how this all plays out. Argentina continues to appeal against the judgment and negotiations aren't even being considered until that's resolved. The future of YPF and other state-owned entities hangs in the balance and the drama is far from over.

#distressed