Our Special Situations and Insolvency and Restructuring teams have won a summary judgment in favor of the Petersen companies due to the breach of contract by the Republic of Argentina, resulting from the expropriation of Repsol’s shares in YPF—the Argentine national oil company—in a trial in New York.
The Kepler-Karst team involved in this matter included Armando Betancor, insolvency trustee since 2012 when the companies filed for bankruptcy, Rodrigo Olivares-Caminal, Of Counsel at Kepler-Karst and restructuring expert, partners Luis Barber, Eduardo Frutos and Davinia Sánchez, and consultant Guido Demarco.
“It was an arduous task that took many years, balancing two open fronts in Spain and New York. From the beginning we have set up an interdisciplinary and sophisticated team that has allowed us to get this far,” said Betancor.
Thanks to the diligent actions and an innovative strategy proposed by Mr. Betancor, the insolvent companies were able to pursue the lawsuit against Argentina in New York despite their insolvent condition. Everything was possible thanks to a litigation funding agreement that enabled the insolvent companies to meet the litigation costs in the US for almost 10 years.
In this regard, Betancor commented: “[w]e have been at the forefront from the beginning, with the litigation funding agreement that allowed us to defray the costs of the litigation, and to get this far. We are facing a historic ruling that will have international repercussions”.
After almost 10 years of judicial conflict, Judge Loretta Preska, of the Southern District of New York, ruled in favor of the Petersen companies after understanding that Argentina breached YPF’s bylaws by taking control of 51% of the company’s shares without having launched a public tender offer (PTB) for the shares of the remaining shareholders, as stated in Articles 7 and 28 of YPF’s bylaws.
For this reason, the judge ruled that Argentina must indemnify the Petersen companies for the damages caused as a result of the breach of contract. Now damages have to be determined, and, according to the criteria to be established, will range between $10 to $20 billion. In order to determine the exact amount, the judge must determine the date when Argentina took control of YPF’s shares.
On the other hand, the judge ruled that YPF did not breach the bylaws, since the bylaws did not impose on the company the obligation to take actions to restrain the Argentine Republic.
Should Argentina wish to appeal the decision, it will have to submit financial guarantees to the court, which puts the country in a very difficult position.
Armando Betancor, together with his team at Kepler-Karst, has led and managed the judicial process from Spain in coordination with three American and with four Spanish law firms representing the companies and the different parties involved in the U.S. and local courts proceedings.