A U.S. judge overseeing Argentina's debt restructuring case on Tuesday ordered negotiators for the country and holdout investors to meet with a court-appointed mediator until a settlement is reached, as time runs short before a potential default.
Several parties in Argentina's long-running legal battle appeared before U.S. District Judge Thomas Griesa, who heard a range of requests over how to enforce orders requiring payment of $1.33 billion, plus interest, to holdout investors.
Argentina has been pushed to the brink of a fresh debt default by U.S. court decisions. The judicial rulings have forced it to negotiate with holdout investors who declined to restructure their bonds after the country defaulted on about $100 billion in 2001-2002. The country has until July 30 to settle the case or face a second default.
Argentina has argued that if the judge did not stay his ruling ordering payment, a settlement is not possible. The country has said that if it pays holdouts, it opens the door to additional liability that could cost it billions. But Griesa said a stay was not necessary and that a deal was realistic.
"In my view, every single problem you've described is susceptible to be handled in a settlement," he said. "If we don't, there will be a default, and that is the worst thing. That is about the worst thing I can envision. I don't want that to happen. People will be hurt by that, real hurt. Not vultures being hurt, but real people."
Griesa ordered the parties to meet with Daniel Pollack, a New York lawyer appointed to oversee settlement talks, on Wednesday at 10 a.m. ET, and to meet "continuously until a settlement is reached."
Jonathan Blackman, a lawyer representing Argentina, said a settlement "simply can't be done by the end of this month" even with continuous negotiations. The country asked Griesa to put a hold on his order requiring payment to both holdouts and negotiated bondholders so the talks can continue without an "artificial pressure cooker."
Argentina does not want to pay the holdouts, who are led by Elliott Management's NML Capital Ltd and Aurelius Capital Management. The country argues doing so would open it up to as much as $15 billion in claims from other investors and further strain its financial condition.
It said at Tuesday's hearing that negotiation requires "movement" on the part of the holdouts, though the investors have leveled a similar charge at the nation.
"The simple fact is that Argentina's leaders have had no interest in negotiating - not now, and not during the two and one-half years a stay was in place," Aurelius said in a statement before the hearing Tuesday. "They would rather gamble with the livelihoods of the Argentine people than sit down and reach a deal."
The battle continues even as the country's economy minister, Axel Kicillof, has reached agreements with other creditors in an effort to rehabilitate its reputation in international capital markets.