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US Judge Rules Argentina in Contempt of Court: Reports

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A US federal judge has ruled Argentina in contempt of court for its attempts to avoid his orders to pay off hedge funds that sued the country for full payment on their bonds, Reuters reported Tuesday.

MOSCOW, September 30 (RIA Novosti) – A US federal judge has ruled Argentina in contempt of court for its attempts to avoid his orders to pay off hedge funds that sued the country for full payment on their bonds, Reuters reported Tuesday.

"The court holds and rules that those proposed steps are illegal and cannot carry on," federal district judge Thomas Griesa said as quoted by Reuters, referring to the recent domestic legislation Argentina passed, aiming to transfer its bond contracts way from US jurisdiction to Argentine jurisdiction.

Judge Griesa noted that it is "a rare thing" for a country to be ruled in contempt of the US court, but held off on issuing a penalty, which, according to Reuters, could amount to a $50,000-a-day civil fine as requested by the hedge funds.

Most of Argentina's creditors have agreed to a debt restructuring. According to the agreements, Argentina will repay them 70 percent of the face value of their bonds.

Two US hedge funds - Aurelius Capital management and NML Capital - have refused to accept the deal.

Earlier this year, Griesa froze Argentina's ability to transfer funds to restructured bondholders, as long as it does not pay the holdouts in the restructuring, mainly the $1.3 billion in bonds held by Aurelius Capital management and NML Capital.

The ruling forced Argentina into its second default in 13 years.

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