Republic of Argentina Must Pledge Assets to Impose Temporary Stay of $16.1 Billion Judgment in Burford Capital Suit

Judge Cites Findings of Compass Lexecon Affiliate Professor Charles W. Calomiris

In September 2023, relying on the testimony and analysis of Compass Lexecon President Professor Daniel R. Fischel, Judge Loretta A. Preska of the United States District Court for the Southern District of New York awarded one of the largest, if not the largest, damage awards ever after a litigated trial to Burford Capital in its suit against the Republic of Argentina (ROA). In response, the ROA moved to stay the execution of the final judgment pending an appeal without a bond. The ROA argued that because of the unprecedented size of the judgment and many preexisting international creditors, it did not have the financial resources to post a bond.

Counsel for Burford Capital from King & Spalding LLP and Kellogg, Hansen, Todd Figel & Frederick PLLC retained Compass Lexecon affiliate, Professor Charles W. Calomiris, to assess whether the ROA had assets it could pledge as security to satisfy the bond requirement to appeal the $16.1 billion judgment and whether pledging these assets as collateral would risk a default on its existing creditors. Among many potential assets that the ROA could pledge, Professor Calomiris identified ROA’s 51 percent equity stake in YPF SA, an Argentinian oil and gas company (which it had expropriated in 2012), and cash flows from the Yacyretá binational power generator dam that extends from Paraguay to Argentina. Further, he found that the assets available to Argentina to pledge as security for the bond would not precipitate a default on the debts owed to any of its existing creditors, as these assets and their related cash flows do not form the primary basis for Argentina’s servicing of its existing debts.

On November 21, 2023, Judge Loretta A. Preska of the United States District Court for the Southern District of New York ruled in favor of Burford Capital, requiring the ROA to post a bond pending an appeal. The Judge cited the alternative assets identified by Professor Calomiris, specifically the ROA’s 51 percent equity stake in YPF and foreign receivables from the Yacyretá dam that Paraguay has committed to pay Argentina, as security for the bond.

Professor Calomiris was supported by a team led by Adel Turki that included Laura Yergesheva, Cliff Ang, Agustina Levy, Sebastian Zuccon, Diego de la Vega, and Belen Goicoechea.

Compass Lexecon worked with Kevin Morh, Laura Harris, and Roberto Aguirre Luzi of King & Spalding LLP and Andrew Goldsmith and Eden Bernstein of Kellogg, Hansen, Todd Figel & Frederick PLLC.