tuesday, 30 september of 2014

US judge declares Argentina in contempt of court, monetary fine decision postponed

New York district judge Thomas Griesa has declared Argentina in contempt of court, due to the nation's actions in attempting to change debt jurisdictions as a result of the ongoing judicial conflict with holdout investors presided over by the US magistrate.

The justice deferred the imposition of financial penalties worth up to 50,000 dollars a day for a later date.

But he issued a clear warning that Argentina must stop efforts to get around his rulings by making payments locally.

"These proposed steps are illegal and cannot be carried out," Griesa said, his voice rising, during a court hearing in lower Manhattan.

Those steps, he said, include legislation Argentina passed that would allow it to replace Bank of New York Mellon Corp as trustee for some restructured debt with Banco de la Nacion Fideicomiso while allowing a swap of that debt for bonds payable in Argentina under its local laws.

Griesa ruled that the country had not followed the court's orders following the passing of a law which seeks to remove the Bank of New York as Argentina's financial intermediary to pay bondholders, currently unable to receive funds for debt servicing.

He went ahead with the contempt ruling despite warnings from the government to US Secretary of State John Kerry that it could constitute interference in Argentina's sovereign affairs.

Plaintiff bondholders, led by Elliott Management Corp's NML Capital Ltd and Aurelius Capital Management, have urged Griesa to consider unspecified non-monetary sanctions that could push the country to comply.

Those sanctions might, for instance, include barring Argentina from doing business with US banks, though such a ruling would likely engender fresh litigation over whether Griesa has the authority to do so.

(Published by Buenos Aires Herald - September 29, 2014)

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