U.S. District Judge Thomas Griesa on Thursday declined to find Argentina in contempt of court for its proposal to bring defaulted sovereign debt under local law.
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Griesa said the proposal unveiled by Argentine President Cristina Fernandez on Tuesday was illegal but that a contempt order now would not help bring about a settlement in the case between the Republic and deep-pocketed holdout creditors.
Holdout investors NML Capital Ltd, an affiliate of Elliott Management Corp and Aurelius Capital Management asked Griesa to issue a contempt order, in the latest twist of its longstanding battle to collect on its court award of $1.33 billion plus interest on defaulted debt. They said Argentina's proposal, which is being brought before its congress, would violate Griesa's anti-evasion rulings that payments not be shifted outside of the U.S. court's jurisdiction.
Griesa reiterated that he hoped there would be a settlement in the case. "It does not add anything to the scales of settlement to make a finding of contempt," Griesa said. (Reporting By Nate Raymond and Joseph Ax; Writing by Daniel Bases and Noeleen Walder; Editing by Diane Craft)