US District Judge Thomas Griesa declared on Thursday that an Argentine plan to change the 'jurisdiction' of restructured foreign debt was illegal, while resisting holdout investors' demands that Argentina be held in contempt of court for attempting to change the site of payment to Buenos Aires.
Griesa stopped short of issuing a contempt order against Argentina, which holdout funds had requested at the start of Thursday's audience along with financial penalties. But he made it clear that any change of payment location would be in clear violation of his ruling, which states that holdouts must be paid before restructured bondholders.
The judge further added that any entity that aids Argentina in its efforts to move jurisdiction would also be in violation of his sentence.
Hedge fund NML Capital's lawyer Robert Cohen had stated that moving the debt jurisdiction to Buenos Aires would have the effect of gutting Griesa's order, resuming attacks on Argentina by the so-called 'vulture funds'.
The justice in turn, expressed that he was horrified that Argentina had not consulted with their New York legal team before announcing their intention to move payments.
The outburst came when Cleary & Gottlieb, Argentina's representatives in the dispute, told Griesa they had not been involved in the decision taken earlier this week. The judge considered that Argentina had taken a lawless position, while insisting that an agreement would be the best outcome.
Argentine economy minister Axel Kixcillof on Wednesday argued that the government was not changing the payment jurisdiction, but seeking a “change of payment location” for bondholders to “collect” their money. “A government can't be banned from servicing its debt,” he insisted ratifying Argentina’s “unbreakable will” to pay and the fact that the country had not fallen in default.