key company debt ruling

The Supreme Court reversed a sentence that ordered, under Decree 214/2002, the pesification of the debt. The details

The Supreme Court of Justice de la Nación issued a key ruling for Argentine companies, especially those that have expenses and debts in Dollars.

Unanimously, the highest court reversed a sentence that had ordered the pesification of a debt in foreign currency of a firm with a bank. Everything originated in a purchase of tractors made in dollars, between May 1998 and August 1999.

In the case, the signature Transco SA It acquired tractors through three operations carried out in United States dollars and framed in the ALADI Agreement on Reciprocal Payments and Credits. They were, in part, paid through letters of credit and, in part, financed through the issuance of bills in favor of the Brazilian exporter, which were, at the request of the company, endorsed by the Velox bench.

Behind the pesification provided by law 25,561 and decree 214/2002 of the obligations agreed in US dollars or other foreign currency, the Executive Branch issued decree 410/2002, which excluded from this pesification certain operations, such as those related to foreign trade and those governed by foreign law.

The dollar, key for companies that import inputs.

Debt in dollars: the company wanted to pay in pesos

The debtor company went to court and obtained a favorable ruling from Chamber B of the Federal Chamber of Mendoza., which reversed the sentence of the previous instance and declared that article 1 of decree 410/2002 it is inapplicable to the debt that the plaintiff had with Banco Velox SA and ordering to pesify it in the terms of article 3 of decree 214/2002. He ordered that bank and the Central Bank of the Argentine Republic to receive the corresponding payments in pesos.

Against said pronouncement, the National state interposed extraordinary resource, arguing that the decree 410/2002 “It is constitutional and applicable to the case.”

He also stressed that neither the ALADI Reciprocal Payments and Credits Agreement nor any other regulation “established an exchange insurance system or monetary stability in favor of the plaintiff or any other administered entity” and that the international trade operation carried out ” it sets up a risky business, which was taken over by the plaintiff. ”

He concluded that “it is not fair that the losses of a commercial operation carried out by the plaintiff be placed on the National State, by the mere fact of having modified the exchange rate, when the Argentine company assumed that risk. ”

Why the Court Requires Payment in Dollars

Faced with the complex scenario and a litigation spanning more than a decade, the Supreme Court declared the extraordinary appeal filed by the State in the “Transco S.A. v. National State and another s / amparo against acts of individuals” admissible. The Supreme Court shared the foundations and conclusions of the opinion prepared by the Office of the Attorney General of the Nation.

Dollars: the company must respond to its obligations in foreign currency.

Dollars: the company must respond to its obligations in foreign currency.

The opinion highlighted, among other issues, that the operations that gave rise to the actions “are financing linked to foreign trade -import of tractors- where a financial entity -Bank Velox SA- intervened as guarantor”. In this way, the attorney Víctor Abramovich did not share the reasons stated in the appealed judgment to judge that decree 410/2002 is inapplicable to these operations, notes Diario Judicial.

“Indeed, neither the fact that the operations have been framed in the ALADI Agreement on Reciprocal Payments and Credits nor the fact that foreign subjects are disinterested modifies the nature of the operation,” concluded Abramovich.

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Written by Argentina News

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