The vulture investor Argentina now likes

The newfound love affair Argentina has with the American right now extends even to a man who used to be on top of its enemies list.

Why it matters: Just a few weeks ago, it was unthinkable that any Argentine president, even Javier Milei, would ever have anything nice to say about Jay Newman, the former Elliott Management investor who successfully won billions of dollars from Argentina in 2016.

• Yet that is exactly what happened earlier this month.

The big picture: Argentina, which has defaulted on its debt seven times since 1951, has had countless fights with creditors over the years, but the biggest and most painful of those fights was with Elliott.

Zoom in: Milei tweeted out to his 3.8 million followers a Financial Times column by Newman — Milei called it an "excellent article" — that lays out a series of reasons why Argentina should win its $16 billion dispute with Burford, a publicly-traded litigation-finance company.

• Burford spent some $15 million to purchase claims against Argentina related to the 2012 nationalization of oil company YPF.
• In 2023 New York ​judge Loretta Preska ruled that Burford was owed $16 billion, more than 25% of the Argentine budget last year.

Where it stands: Preska's ruling is a real risk to the success of Argentina's IMF latest deal. The fund would never countenance Argentina taking its billions and sending them straight out of the country to foreign vulture investors.

• As Newman noted in 2023: "President-elect Javier Milei is fond of saying "there is no money" to countrymen demanding continued subsidies. If there is no money for Argentines, it goes double for Burford."

Between the lines: Newman's argument is, broadly, twofold.

• First, he says that this case doesn't belong in a New York court at all. "The dispute is purely local," he wrote, notwithstanding the fact that YPF shares were traded in New York when it was nationalized.
• Second, he said any peso-denominated monies due to the plaintiffs should be converted to dollars at the exchange rate on the day the judgment was handed down. That would bring the damages to about $100 million rather than $16 billion.

What comes next: The Second Circuit Court of Appeals is now expected to rule on this case in the coming weeks.

• Even if it upholds Preska's judgment, however, it's highly unlikely that Argentina will pay up. Burford would have to try to convert a judgment into an actual payment, the exact fight that Newman spent years of his life on.
• But Burford wouldn't have the two biggest weapons Newman enjoyed in his case: a waiver of sovereign immunity in bond documentation and a pari passu clause (a guarantee of equal rights) in the same documents.

The bottom line: Burford is unlikely to get paid any time soon, and Milei can now count one more Wall Street type who has moved over to his side.