Argentina: Unbreakable? Argentine Decrees Halt Reorganization and Bankruptcy of Public Utilities

Last Updated: 23 September 2002

Originally published in Argentine Business Law Watch1 on September 20, 2002

New Decrees

On September 17th the Argentine executive branch released two decrees that affect stakeholders (creditors, shareholders, and employees) of Argentine public utilities and concessions.

Decree 1839/2002 extends the term to renegotiate licenses and concession contracts. The government had previously committed to renegotiate tariffs, royalties, and other economic terms by August 15th. The decree postpones this term 120 business days, pushing back the deadline to February 15, 2003, and builds in a 60-day extension if the government wishes to delay further negotiation. Thus, the decree effectively extends the deadline to April. Decree 1839 further authorizes "temporary measures" during the renegotiation period.

Decree 1834/2002 proclaims that, until December 10, 2003, neither the filing of a voluntary petition for reorganization or bankruptcy by a licensee or concession holder nor the filing of an involuntary petition for bankruptcy by a creditor will terminate a license or concession, regardless of the terms of the license or concession.


These decrees strongly suggest the current administration’s unwillingness to tackle renegotiation of licenses and concessions affecting public services that range from toll roads to power generation, transportation, and distribution. In the aftermath of devaluation, most public service providers found themselves caught between peso revenues and dollar-denominated debt. Even placing aside the devastating financial effects of deflation on these companies, the acute economic recession has cut revenues, as Argentines have been forced to reduce consumption. Decree 1839 leaves the daunting task of negotiating economically attractive terms that do not price services beyond the public reach to the next administration scheduled to assume office in May 2003.

Decree 1834 reflects the current administration’s awareness that, absent renegotiation of terms, the current economic context will force many licensees and concession holders to reorganize in response to creditors’ petitions for bankruptcy. The decree trumps the card held by creditors of many utilities that a reorganization or non-dismissed bankruptcy petition forces forfeiture of the license or concession. By executive fiat, the licensee or concession holder must continue to operate, whether or not the business is profitable.

Local media have reported the government’s unofficial acquiescence to an approximately 10% tariff increase in December, following public hearings. If true, it would explain the ambiguous reference to "temporary measures" included in decree 1839/2002.

The decrees effectively compel investors in various public services to continue operating at a loss. Already as a result of the sea change of Argentine economic policy, certain of our foreign investor clients have considered filing arbitration claims in the International Center for Settlement of Investment Disputes (ICSID) against the Argentine government under Bilateral Investment Treaties. The government’s virtual punt this week of a critical issue is likely to push clients to choose litigation.


In prior editions of Argentine Business Law Watch we advised you of several pending reorganization proceedings in which the debtor, with varying degrees of success, had argued for the conversion of foreign dollar-denominated claims to pesos at a one-to-one rate.

This month two unpublished court orders issued in large reorganization proceedings upheld foreign law dollar-denominated claims over the debtors’ objections. The court orders both rely on Decree 410/2002 issued earlier this year, which exempts foreign law claims from conversion. In one of the orders, the court added further weight to creditors’ claims by expressly rejecting the debtor’s argument that a creditor’s submission to the jurisdiction of an Argentine bankruptcy proceeding waived the benefits of a foreign law claim.

If you have any questions or comments concerning public service licensees and concession holders and insolvency matters, please do not hesitate to contact Juan Javier Negri or Mariela Caparrós at Negri Teijeiro & Incera.


In a landmark decision, the Argentine Supreme Court recently enjoined the Province of Chubut from regulating labeling of products shipped between provinces.2 The court, acting in an original action over a claim asserted against the province of Chubut, upholds federal supremacy and preemption in matters of inter-provincial commerce. The court’s decision comforts manufacturers with the knowledge that federal labeling standards (specified in the Código Alimentario Argentino) will control and products shipped to other provinces need not be relabeled to conform to local law.

1 In re Gatic s/ concurso preventivo and In re Productos Sudamericanos s/ concurso preventivo.

2 Kraft Foods Argentina v. Provincia del Chubut, CS, 2002/03/12.

This article is provided as a service to clients and friends of Negri, Teijeiro & Incera. It is not intended to impart legal advice on any matter.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions