The YPF Gold Rush
New developments in the Burford / Petersen YPF case
Welcome Avatar! After Judge Loretta Preska ordered Argentina to “show Burford the BCRA gold bars”, the Milei admin replaced its Attorney General defending the country against Burford’s $17 billion dollar claim. It looks like the YPF case is accelerating towards a final outcome. Let’s go over the latest details.
Petersen’s Weeds
This week, Argentine businessman Enrique Eskenazi died at the tender age of 99. As one of the key figures in this YPF saga, he leaves behind a substantial legacy as the founder of 26% YPF shareholder Grupo Petersen and getting a hold of that percentage through obscure public funds that were never revealed officially.
Autist note: if you’re not familiar with the origins of the case, and how it is tied to a corruption scandal under previous administrations, this article goes over all the specific details of the YPF privatization and re-nationalization, and how the spoils were shared:
It is his same Grupo Petersen that initially started the lawsuit around YPF’s expropriation, which later sold the litigation to Burford Capital, while maintaining a smaller stake in the case.
No matter how much Roundup Argentina tries to dump on this case initiated by Grupo Petersen, its weeds will not perish.
Show me the Gold
New sprouts emerged at the start of 2025, when New York judge Loretta Preska issued a strong ruling in the case of the expropriation of the oil company, forcing Argentina to reveal key data requested by the plaintiffs Burford Capital regarding the location and quantities of Central Bank gold held offshore.
As I wrote in The BCRA Gold Reserves "Mystery" in October last year, one of the main risks for the BCRA to yield farm its gold at this particular moment in time, is the pending YPF case:
[…] since this gold is located abroad, it could potentially be seized by Burford if judge Preska allows it.
Well, she has now specifically demanded Argentina discloses the exact location and quantities for the purpose of the demands. This does not mean that Burford can directly seize it, as Sebastián Maril explained to Clarín this week:
“Creditors want information on all Argentina’s assets abroad that could be seized, such as gold, but also bank accounts. Neither gold nor the accounts of diplomats or embassies are seizable if they were not used for commercial purposes; but if they were, then they could be seized.”
Unfortunately for Argentina, the fact that the gold reserves are used as collateral in a REPO structure to reinforce its BCRA reserves, likely means that it would be subject to seizure.
No Hay Plata.
In the first weeks of Milei’s presidency his message was clear: no hay plata. Infrastructure projects were paused, government employees were let go, initiating one of the biggest State reduction efforts in Argentine history.
From the lens of the Milei administration, Burford will have to wait until Argentina’s conditions to pay improve.
One idea that floated around right after Trump launched his family memecoins, was to have Milei launch some memecoin and pay part of the Burford case by rugging its hodlers. However fun this financial fantasy football may be, this will likely not be the way Argentina proceeds to deal with this expensive piece of Kicillof’s inheritance.
By now, the $17.1 billion dollar demand — after additional interest —, could be paid in several ways, but one thing is sure that there is no way that Argentina can fulfil this payment in one go.
The BCRA net reserves are still negative, and with the wall of maturity payments this year, an upcoming election in October and a potential release of the currency restrictions after that, the Milei admin paying 17 billies at once is wishful thinking.
Months after Milei raised the possibility of launching a "perpetual bond" or Tasa Kicillof to settle the YPF case, no concrete strategy has emerged.
Last November, Burford tried to lay a claim on the US-listed shares of YPF, in an attempt to confiscate a slice of Argentina’s State-owned shares, which was refused by the US Justice Department, since it would violate international law:
[…] US Department of Justice sent Preska a letter asking she not allow Burford and others to seize YPF’s US-listed shares. The US Justice Department said allowing a private litigant to seize foreign assets on US soil poses risks to US foreign policy interests and reciprocity abroad.
That is a short-term win for Argentina.
However, even in the potential case of handing over the YPF State-owned shares to Burford to pay off part of the sum owed, at the current market cap that 51% would amount to roughly $9 billion dollars. So that still leaves an $8.1 billion dollar hole.
Autist note - if you want to know more about why it is practically impossible to hand over the State-owned YPF shares to Burford — and why that is a positive thing while it lasts —, this article goes into depth about Milei’s main privatization efforts and highlights some cases where these will likely have a positive outcome and where this is probably less so:
Potentially confiscating all of the BCRA gold would mean another $4.9 billion for Burford, so that still does not settle its demands. There would still be $3.2 billion left to pay.
Could that remaining $3.2 billion come from a meme coin rug pull? Only time will tell.
Something tells me that when and how this case finally gets settled will be something for the history books, just like the Elliott Management bond case against Argentina that finally concluded in 2015.
Judge Preska has allowed the plaintiffs to initiate embargoes against Argentina from now on, as happened by order of Judge Thomas Griesa in that particular Elliott Management case, with the Libertad frigate in 2012 and the debt payments withheld in New York in 2014.
From "El Chino" to Barra to Castro Videla
Taking a closer look at the people handling the case on Argentina’s behalf, the body responsible for Argentina's judicial strategy in this dispute is the Attorney General's Office.
Carlos Zannini, a Kirchnerist pur sang, has been a close acquaintance of the Eskenazis since 1998, and together with Néstor Kirchner he made sure Grupo Petersen would secure its percentage in the oil company.
In 2019, when Cristina Kirchner returned to power alongside Alberto Fernández, her faithful squire Zannini was appointed Attorney General. On behalf of Argentina, Zannini argued before Loretta Preska's court that expropriation was a sovereign decision that should be settled in the Argentine courts.
In February 2020, Zannini added more troops from an American law firm to the YPF case, which was paid $1.6 million over a period of ten months. To no avail, since Argentina lost the case.
At the start of Milei’s presidency, Rodolfo Barra was appointed as the Attorney General to lead the appeal, but he was displaced by the Milei administration earlier this week.
Two events marked Barra’s time in the Milei government: one was his defense of Cristina Kirchner in the Vialidad corruption case, even though the courts found her guilty, and the other event was his withdrawal from the YPF case with Burford due to his favorable comments regarding the former president.
When Barra took office, he decided to continue the strategy inherited from the previous administration led by Carlos "El Chino" Zannini.
While many wanted Barra to step down after defending Cristina Kirchner, the breaking point between Barra and the libertarian administration was a public employee lawsuit. Barra had hired a worker through an agreement with the Association of Automobile Dealers of the Argentine Republic (Acara), and those involved in that agreement received an additional kickback incentive incorporated into their pay slip.
Logical conclusion: ¡AFUERA!
However, this could have been a simple pretext to allow for a more strategic Attorney General take his place, in order to start negotiations with Burford Capital.
This week Santiago María Castro Videla, a man with male and female first names, and communist and anticommunist last names, was appointed by the Milei administration as the new Attorney General following Barra’s exit.
Castro Videla is definitely not a newbie when it comes to the YPF case: he is a partner in the Bianchi, Galarce & Castro Videla law firm, the same firm where one of its partners, constitutionalist Alberto B. Bianchi, acted as a witness on behalf of Burford Capital in the trial against Argentina for the expropriation of YPF.
No conflict of interest detected by this Dutch Patagonian rodent whatsoever.
On the other hand, the choice for a member from Bianchi’s firm is a logical one from Milei’s perspective: Bianchi defended the powers of the President in doctrinal areas regarding the scope of the decree 70/2023 which granted him additional powers for Executive Orders, and even wrote a favorable column in La Nación about Milei’s initial mega decree.
With the newly appointed Castro Videla, it does seem that the YPF expropriation case will start to move towards a negotiation phase, depending on the outcome of Argentina’s appeal.
Final Thoughts
The YPF lawsuit in the United States originated by Grupo Petersen and currently led by Burford Capital seems to be nearing its final stages. As this case seems to be nearing its conclusion, the stakes are high for all parties involved:
The stakes are high for Argentina not just in this case, but also as a litmus test in Milei’s bid to attract foreign investment. The president’s new reforms meant to bring in large foreign investments specifically allow companies to resolve potential legal disputes outside Argentina should a project go awry there.
The lawsuit has been pending for more than 9 years.
Even though the case is currently in the appeal stage, unlike the Argentine justice system that lets plaintiffs litigate indefinitely up to the Supreme Court while never enforcing a sentence, in the US justice system any sentence must be enforced as long as the judicial process continues, even if it is from the first instance.
The final judgment in the first instance obliges Argentina to pay $16 billion dollars + interest to Burford Capital, amounting to $17.1 billion at the time of writing.
For both parties it’s as clear as day that this amount is unaffordable, but that fact does not mean they can’t negotiate to reach a possible agreement.
It seems that Milei is willing to pay or at least negotiate, and Burford knows it. The question is what priority Milei will put on the agreement of a payment plan with Burford, and how much of a strain this will be on the Argentine economy.
See you in the Jungle, anon!
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