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The US Supreme Court has declined to hear Argentina’s appeal against a ruling allowing creditors to seize more than $300mn from overseas accounts, in a blow to the cash-strapped nation’s efforts to avoid paying billions awarded to former investors by foreign courts.
The seizure of the funds would mark the first time in roughly a decade that claimants have successfully taken ownership of Argentine assets, analysts said, despite a wave of lawsuits working their way through international courts over disputed decisions taken by previous governments.
The claimants in the case are a group of investment funds that owned bonds affected by Argentina’s massive 2001 sovereign debt default, which were never exchanged despite three rounds of restructurings and settlements in 2005, 2010 and 2016. The holdouts later won judgments against the country worth $450mn.
Libertarian President Javier Milei has pledged Argentina will pay all its obligations, but officials have warned privately that the country will keep pursuing legal avenues to reduce them, as the government attempts to fix a severe economic crisis.
“As far as I am aware there are no other petitions Argentina can make [to avoid this seizure]although Argentina often finds ways to kick the can down the road,” said Sebastián Maril, a director at consultancy LatAm Advisors who follows the litigation.
“Nobody has gotten this far — to a supreme court — to authorise a seizure, despite many attempts,” he added.
Lawyers say it is extremely difficult to identify Argentine state assets to seize, leaving claimants unable to recoup payments, despite large judgments against Argentina. The claimants include those in lawsuits relating to the 2001 default and the expropriations of energy company YPF and the country’s state airline.
A separate group of holdouts from the 2001 default once embarrassed Buenos Aires by briefly seizing an Argentine navy vessel in a port in Ghana in 2012, and also seized $70mn from the country.
By far the largest judgment facing Argentina is $16bn awarded by a New York court in 2023 to former shareholders in YPF, which was renationalised by the Argentine government in 2012.
While Argentina is appealing against that judgment, the claimants — largely financed by litigation funder Burford Capital — have launched a sweeping search for assets that could be seized, including asking the court for permission to seize the state’s YPF shares.
The petition the Supreme Court declined to hear on Monday related to the proposed seizure of more than $300mn that Argentina holds in the custody of the New York Federal Reserve.
A New York federal court had ruled Argentina must hand over the funds, rejecting its argument that they are central bank assets and therefore granted immunity under the Foreign Sovereign Immunities Act.
Maril said the holdouts’ success would not be easily replicated by other plaintiffs. “What they have managed to find is extremely specific and it will be very difficult to find other sovereign assets in reach.”
But Bernardo Saravia Frías, a former attorney-general of Argentina, wrote in a blog post on Monday that the court’s’ rulings meant the protection of sovereign immunity “which used to limit creditors’ capacity for aggression, has just been significantly scaled back . . . it’s becoming more and more difficult to [mess around] without facing consequences”.