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Investing.com -- Burford Capital (NYSE:BUR) stock fell as much as 15% on Wednesday after a U.S. appeals court signaled it might set aside a $16.1 billion judgment against Argentina that the litigation finance firm had backed.
The three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan expressed skepticism about whether the case, involving Argentina’s 2012 seizure of state-owned oil company YPF, belonged in U.S. courts. Circuit Judge Denny Chin remarked during the hearing, "It does have a feel like this should have been in Argentina," questioning the appropriateness of U.S. courts interpreting Argentine law.
Argentina is appealing U.S. District Judge Loretta Preska’s September 2023 award to two former YPF shareholders, Petersen Energia Inversora and Eton Park Capital Management. The litigation stems from alleged losses when Argentina nationalized the oil company.
The potential reversal represents a significant threat to UK-based Burford Capital, which funded the litigation and stands to receive a substantial portion of any award. According to Argentina’s lawyer, the judgment has already grown to approximately $18 billion with interest.
Burford shares pared some losses but were still set to close down about 9% after two judges on the panel questioned whether the lawsuit should have been filed in Argentina, where local judges could better interpret local law.
The case centers on whether Argentina violated YPF’s bylaws when it took control of the company without making an offer to other shareholders.
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