US judge criticizes Argentina while delaying 51% YPF stake turnover

A U.S. judge on Monday temporarily spared Argentina from turning over its 51% stake in oil and gas company YPF YPDCB to partially satisfy a $16.1 billion judgment, while criticizing the South American country for resisting payment.

U.S. District Judge Loretta Preska in Manhattan pushed back Monday's deadline to complete the turnover to July 17, solely to let Argentina continue seeking relief in the 2nd U.S. Circuit Court of Appeals.

Preska rejected a longer stay, saying Argentina "continues to delay and circumvent its obligations" under the $16.1 billion judgment, and cited legislation in the country to prohibit the YPF turnover.

"The Republic has abused the court's accommodations and thus will not be given additional ones," the judge wrote.

A spokesperson for the government of Argentine President Javier Milei said the country "is not failing to comply" with the turnover order.

Argentina on July 10 filed an emergency motion with the appeals court to delay the turnover to Petersen Energia Inversora and Eton Park Capital Management, which won the $16.1 billion judgment.

On Monday, it proposed giving them until July 17 to oppose a longer delay, with Argentina's reply due by July 22.

Argentina has warned its economy could be destabilized if it gave up its controlling stake in YPF, the country's largest energy company.

Milei has been seeking to bolster foreign currency reserves and rein in soaring inflation, while dealing with a heavy government debt burden.

The dispute arose from Argentina's 2012 decision to seize the YPF stake from Spain's Repsol REP without making a tender offer to minority shareholders Petersen and Eton Park.

Those shareholders are represented by litigation funder Burford Capital BUR, which has said it expected to receive 35% and 73% of Petersen's and Eton Park's respective damages.

Burford and its U.S.-based lawyer did not immediately respond to requests for comment on Monday's order.

In September 2023, Preska ordered Argentina to pay $14.39 billion to Petersen and $1.71 billion to Eton Park.

Argentina is appealing that judgment.

The country has argued that the YPF shares were immune from turnover under the U.S. Foreign Sovereign Immunities Act, and that a turnover would irreparably harm its sovereignty, violate international law and wrongly expand U.S. courts' power.

Argentina also said it would be unfair to give up its YPF stake, because doing so would likely be irrevocable even if it ultimately won the case.

Burford said a commercial activity exception to sovereign immunity, plus years of evasion by Argentina, justified a YPF turnover.