Argentine football giant San Lorenzo finds itself in dire economic straits after the National Commercial Appeals Court reversed a decision halting a bankruptcy order from one of the club’s benefactors.

San Lorenzo owes U$S5.3 million to the Swiss fund AIS Group after assuming the debt between 2019 and 2020. Both parties had reached an agreement on payment terms, but the club missed its deadlines in 2025, reactivating the lawsuit. In May, Judge Guillermo Pesaresi had rejected a request for bankruptcy from the fund that had halted further legal action.

That stop ended on Tuesday when the National Commercial Appeals Court repealed the decision, ordering the club to make full payment. San Lorenzo now has five days to comply or reach a new agreement with AIS Group, or it must file for bankruptcy.

What happens if San Lorenzo can’t pay its debt?

In Argentina, sporting institutions are safeguarded under the National Law 25.284, known as the “Sporting Institutions Rescue Law” or “Racing Law.”

Approved by the National Congress in 2000, the law aims to “protect sports as a social right” by helping sporting institutions continue operations even while facing bankruptcy. This law requires clubs to fire their board of directors and replace them with a special, three-member trust appointed by the federal government. The goal is to generate new sources of revenue to guarantee the payment of debts, be it through the sale of assets, budget cuts, or other measures.

After three years, the judge in charge of the case has the power to either grant a continuance or proceed with the club’s liquidation. The process can be extended for nine years. However, clubs seldom escape unscathed, as they are often subject to economic and sporting sanctions that cause them to miss international competitions or even face relegation.

Racing became the first club to trigger the law in 2000. Since then, several Argentine clubs have fallen under government administration, including Córdoba derby duo Talleres and Belgrano, Deportivo Español, Temperley, Ferro, Talleres (Remedios de Escalada), Chaco For Ever, and Alvarado (Mar del Plata).