Griesa says Argentina’s swap plan is illegal

Griesa says Argentina’s swap plan is illegal

US District Judge Thomas Griesa has ordered Argentina not to proceed with a plan to swap restructured bonds under New York law for local paper saying the deal would be “illegal”.

Argentina's Congress (David Berkowitz)

Instead, Judge Griesa urged the Argentine government and holdout creditors to continue negotiating with court appointed mediator Daniel Pollack. Argentine state-run media reported Griesa as saying he was confident that the parties will reach an agreement “sooner rather than later”.

“The Judge is insisting that the Argentine Republic must negotiate and he refuses to see that, in fact, the ones that aren´t negotiating are the vulture funds … Far from dispensing justice and generating balanced conditions, the Judge just wants to help the vulture funds,” the Argentine finance ministry said in a statement on Friday.

Argentina’s voluntary swap proposal is seen as a last-ditch attempt to circumvent Griesa’s order calling for the country to pay holdout creditors led by NML Capital around $1.5bn before servicing restructured debt. The order effectively barred Argentina from making a payment to restructured bondholders in late June, which meant that the country was declared in default on July 30.

Meanwhile, Griesa rejected a request by holdout creditors that Argentina should be declared in contempt of court for making the swap proposal.