Blow for Burford as $16bn Argentina ruling overturned

Burford Capital’s shares plunged nearly 50% on Friday after a US appeals court overturned a $16 billion judgment tied to one of the UK-listed litigation funder’s most significant investments.

The New York court reversed a 2023 decision that had found Argentina liable for damages following the nationalisation of oil company YPF.

The firm previously described its YPF exposure as one of its “four pillars of value” and had called the original ruling a “complete win at the high end of the possible range of damages”.

High-stakes reversal

The dispute stems from Argentina’s 2012 nationalisation of a 51% stake in YPF. Former minority shareholders argued that the move should have triggered a mandatory tender offer under the company’s bylaws - a position accepted by a New York court in 2023, which awarded around $16 billion in damages.

Burford purchased the claims - one out of insolvency proceedings for €15 million - in the mid-2010s and stood to make a 37,000% return based on its share of the damages.

Argentina appealed on several grounds, including that US courts were not the appropriate forum for a dispute rooted in Argentine law.

The ruling continues a pattern of share price volatility tied to the case. Previous developments had already moved Burford’s share price sharply, including a 15% intraday drop following a hearing last October and further impacts after a discovery stay earlier this month.

Reaction

Sullivan & Cromwell is acting for Argentina, with a team led by firm co-chair and high-profile litigator Robert Giuffra.

Giuffra told the Financial Times the decision was “a setback for the litigation funding industry”, adding that investors may question the risks of backing high-stakes claims “when a 37,000 per cent return on investment becomes zero”.

Argentina’s president Javier Milei hailed the ruling as a victory, calling it “a day of celebration”.

Burford CEO Chris Bogart said the decision was “very disappointing and a remarkable abandonment of the rights of minority NYSE shareholders”. He pointed to alternative routes, including investment treaty arbitration, noting Burford has “long had” US law firm King & Spalding working on that option.

Burford said it expects to take a “non-cash write-down” reflecting the substantial carrying value of the YPF claim on its balance sheet, though the size has yet to be determined.

Bogart emphasised that Burford’s broader portfolio continues to perform strongly, saying the business is “driven by a large portfolio of matters apart from YPF”.

Alongside litigation funding, the firm has been expanding into legal industry investments, including taking direct stakes in law firms, with the US a key focus.