Burford Capital Shares Plunge 50% After US Court Overturns $16bn Argentina Ruling
Shares in the dual-listed litigation funding group Burford Capital have crashed nearly 50% following a dramatic US court decision that overturned a massive $16 billion ruling against Argentina. The stunning reversal represents a severe blow to the litigation funder, which had been poised to receive approximately $6.2 billion from the original judgment.
Court Reverses Historic Argentina Liability Ruling
The US Court of Appeals for the Second Circuit has reversed a previous District Court ruling that found Argentina liable to pay $16 billion to former shareholders of oil major YPF. This dispute originates from Argentina's 2012 expropriation of a 51% stake in YPF from Spain's Repsol, one of the most significant corporate seizures in recent history.
In what was considered a landmark decision in US legal history, the US District Court for the Southern District of New York had ordered Argentina in 2023 to pay approximately $16 billion to two claimants—smaller shareholders backed by Burford Capital. The litigation funder had financed the legal battle and stood to gain substantially from the favorable ruling.
Appeals Court Cites Argentina's Financial Constraints
Despite acknowledging Argentina's "knowing and flagrant violation" of promises made to foreign investors, the appeals court determined that Argentina likely could not have raised $1.1 billion without those protections. Lawyers representing Argentina had previously argued that the cash-strapped nation could not afford such a massive payment and that US federal courts should not have jurisdiction over these claims.
Argentina's President Javier Milei celebrated the decision on social media, calling it "the best possible scenario" for his country. The ruling parties now have 14 days to apply for a rehearing, but Burford has indicated they may appeal to the Supreme Court or pursue investment treaty arbitration as alternative legal avenues.
Market Reaction and Company Response
Following the court's decision on Friday, Burford Capital shares experienced their most significant decline since July 2020, falling nearly 50% on the New York Stock Exchange and over 46% on the London Stock Exchange Group. The dramatic sell-off reflects investor concerns about the company's expected cash inflows from the YPF case.
Burford Capital Chief Executive Christopher Bogart described the decision as a "remarkable abandonment" of shareholder rights but emphasized that the company's core business remains strong and diversified beyond this single case. In a statement to shareholders on Monday, Bogart acknowledged market disappointment while expressing optimism about eventual positive outcomes through international arbitration.
"We understand—and share—the market's disappointment with Friday's court decision regarding YPF," Bogart stated. "While we are optimistic about an eventual positive outcome in the case given the availability of international arbitration, we recognize that represents a meaningful delay in expected cash proceeds and affects investors' views about Burford's present value."
Argentina's Expanding Legal Battles in the UK
Meanwhile, Argentina faces additional legal pressure in the United Kingdom, where law firm Quinn Emanuel has filed a new claim with the English High Court. The firm, led by partner Aidan O'Rourke, seeks an order declaring that Argentina's legal bill "remains substantially unpaid" regarding separate bondholder claims.
The Republic of Argentina was previously ordered to pay approximately £1.1 billion plus interest to holders of GDP-linked securities over the country's non-payment of sovereign bonds in 2014. This case stems from Argentina's economic maneuvers in 2013, when the country was on track to make payments totaling several billion euros across different bond series.
Argentina abruptly ceased publishing its historic GDP data series, changed calculation processes, and issued a final-year GDP growth figure just below the payment threshold—actions that prompted a mammoth lawsuit filed in London by Quinn Emanuel on behalf of bondholders including Palladian Partners.
After a trial heard in October and November 2022, the High Court sided with bondholders for the 2013 financial year, ordering Argentina to pay over £1.1 billion. Argentina's attempt to appeal to the UK Supreme Court was rejected, and lawyers are now seeking declarations that Argentina breached this ruling as parties remain unpaid.
Investors are additionally suing for payments due for 2017, 2021, and 2022, estimated at another €1.58 billion (£1.36 billion), further complicating Argentina's international legal challenges as it navigates multiple high-stakes financial disputes across different jurisdictions.
