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NY judge scolds Argentina, but no contempt order

Published on NewsOK Modified: August 21, 2014 at 10:43 pm •  Published: August 21, 2014
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NEW YORK (AP) — A federal judge in Manhattan on Thursday said Argentina's plans to evade his orders by failing to make required payments to U.S. bondholders is illegal and cannot be carried out, but he stopped short of finding the South American nation in contempt of court.

U.S. District Judge Thomas Griesa called Argentina's actions toward U.S. bondholders "lawless." However, he rejected requests by lawyers for U.S. hedge funds to make a contempt finding, saying he wanted everyone to concentrate on an eventual settlement.

"That is the path that should be taken," Griesa said. "In my judgment, it does not add anything to the scales of settlement to make a finding of contempt."

At an Aug. 8 hearing, Griesa had threatened Argentina with contempt, saying the nation's leaders were making "false and misleading" statements as they ignored obligations to pay the hedge funds.

Since then, Argentina's public statements have grown more defiant. President Cristina Fernandez this week announced plans to make interest payments to other bondholders through her nation's central bank rather than U.S. banks that are subject to Griesa's orders.

"It is illegal, and the court directs that it cannot be carried out," Griesa said.

In a statement late Thursday, Fernandez's office accused the judge of being contemptuous of Argentina's sovereignty in his attack on the president's plan to have her country's lawmakers adopt legislation setting up the alternate repayment system. Griesa is trying to "impose conditions on the Congress, the highest legislative body of the nation."

Fernandez has repeatedly decried the judge's ruling that Argentina must repay U.S. hedge funds that hold some of the Argentine bonds that were defaulted on after the country' 2001 economic collapse.

The funds led by New York billionaire Paul Singer's NML Capital Ltd. bought the bonds on the cheap after the default and are now demanding payment. Argentina's leaders call the funds "vultures" because they refused to participate in swaps in 2005 and 2010 in which over 90 percent of Argentina's bondholders agreed to accept lesser-valued bonds.

"Far from delivering justice and bringing equal conditions among the parties, the judge only looks to favor the vulture funds," Argentina's statement said.

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