New York Federal Judge Loretta Preska ordered Argentina to pay US$142 million to a group of bond holders that have refused to accept the debt restructuring processes the country has launched over sovereign bonds that defaulted in 2001. Preska is the same judge that had already ruled against Argentina in the YPF expropriation case.
The judge’s decision came in a lawsuit brought on by 12 funds that rejected all three debt swaps that Argentina has offered (2006, 2010, and 2016) and have continued to litigate.
In her ruling, Preska stated that “the plaintiffs, Bybrook Capital Master Fund LP (‘Bybrook Master’) and Bybrook Capital Hazelton Master Fund LP (‘Bybrook Hazelton’ and together with Bybrook Master, ‘plaintiffs’), have moved this court for an order of summary judgment,” adding that she had granted said request.
The judge went on to state that “it is hereby ordered, adjudged, and decreed that the plaintiff shall recover from the defendant, the Republic of Argentina,” the debt it was demanding, ordering the country to pay approximately US$142 million to the 12 funds.
Bybrook Capital, one of the benefited parties, is a firm that specializes in “distressed debt,” meaning debt that cannot comply with its original payment obligations, like the case of Argentina’s defaulted sovereign bonds. Preska’s ruling is the first sentence the funds have received in their favor.
A new setback for Argentina
Loretta Preska is the same judge that ruled in favor of Burford Capital in September 2023 regarding the YPF expropriation.
The conflict dates back to 2012, when Argentina expropriated 51% of the shares of oil and gas company YPF from Spanish multinational Repsol, the majority shareholder at the time. Burford bought the trial rights in 2015 and claimed in a lawsuit that Argentina failed to make a tender offer for the companies’ YPF shares. In September 2023, Preska ruled in their favor, ordering Argentina to pay a total of US$16.09 billion to the plaintiffs.
In January 2024, Preska authorized Burford to request the seizure of Argentine assets as payment after the country did not comply with a November ruling in which she ordered Argentina to pledge “alternative assets” as collateral to extend a temporary stay on asset seizure.
The country appealed Preska’s ruling in February, the first major presentation in the case under President Javier Milei’s government, which opted to keep U.S. lawyer Robert J. Giuffra, Jr.’s law firm, which had represented Argentina throughout the trial.
The country argued that Preska’s court mistakenly adjudicated claims that should be judged in Argentina under Argentine law, and not in the United States, a position that has been maintained by the previous administrations of Cristina Fernández de Kirchner, Mauricio Macri, and Alberto Fernández.