NEW YORK : Attorney for Argentina Carmine Bocuzzi arrives at US District Court for a hearing June 27 in New York. — AFP Photo NEW YORK, June 28 (AFP) : A US judge said Friday a deposit from Argentina towards paying off restructured debt was illegal unless hedge funds holding $1.3 billion in bonds were also paid.
Judge Thomas Griesa warned Buenos Aires that any further such payment attempts would put it in contempt, and said the $539 million sitting in an account of Bank of New York Mellon should be returned.
He told the South American country to expedite negotiations to settle with the hedge funds, who held out from joining the 2005 and 2010 restructuring of Argentina's defaulted debt.
Griesa has ordered Argentina to pay both the holdouts, NML Capital and Aurelius Management, and holders of the restructured bonds at the same time, by a June 30 deadline.
He stressed that banks processing the payments are forbidden to pay one without the other.
"It cannot be done and will not be permitted by this court," the federal judge told a Manhattan court hearing. "Therefore this payment cannot be made and anybody who attempts to make it will be in contempt of court."
Argentina has pledged to make good on its debts and deposited enough in a US bank to cover the principal and interest payments for the restructured bondholders scheduled for Monday.
The country's Economy Ministry lashed out at the "bizarre and unprecedented decision."
"Judge Thomas Griesa is trying to prevent our creditors from receiving what is owed to them," it added in a statement.
"He is abusing his authority. This does not fall under his jurisdiction, because the holders of restructured bonds are not being pursued in court."
On Thursday, Griesa refused to freeze an order for Argentina to pay holdouts.
Griesa on Friday called on the parties to continue with negotiations and told lawyers for Argentina that its request to stay the June 30 payment deadline had not been made appropriately.
Recognizing there was no prospect of a deal before the deadline, he suggested it should not make a difference as long as talks progress under the oversight of the court-appointed "special master," New York lawyer Daniel Pollack.
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