By Nicole Hong and Daniel Huang
U.S. District Judge Thomas Griesa directed Argentina to stop
making "false and misleading" statements about the country's debt
obligations, threatening to hold the country in contempt of court
if the statements continued.
Judge Griesa was referring to a two-page ad from Argentina
published in the New York Times and The Wall Street Journal on
Thursday. The ad said Argentina had not defaulted on its debt
obligations because the country deposited the money necessary for
an interest payment due June 30.
The judge said the ad was "false and misleading," as the
statement failed to acknowledge that Argentina had not yet met its
obligations to its holdout creditors, the small group of hedge
funds who have sued the country for full payment on bonds it
defaulted on in 2001. Judge Griesa has ruled that Argentina cannot
pay its restructured bondholders until it pays the holdouts.
On June 26, Argentina deposited some $539 million with Bank of
New York Mellon to make an interest payment to its restructured
bondholders that was due on June 30. Judge Griesa barred BNY Mellon
from sending the payment to bondholders until Argentina pays the
holdouts. Argentina defaulted on some of its restructured bonds
last week, after it failed to reach a settlement with the
funds.
If Argentina continues to make these statements, "it will be
necessary to consider contempt of court," Judge Griesa said.
However, the judge said he "earnestly" hopes it won't get to this
point and expressed his desire to see a settlement between
Argentina and the holdouts. He urged both parties to resume talks
with court-appointed mediator Daniel Pollack.
"It is highly important that settlement negotiations go forward
and bear fruition," Judge Griesa said.
Mr. Pollack said in a statement late Friday that he intends to
"convene and conduct further negotiations until a solution is
reached, however long that may take."
Judge Griesa said Argentina's lawyers were responsible for
monitoring statements made by Argentina.
Jonathan Blackman, a lawyer representing Argentina, responded to
the judge by saying that he and his law firm Cleary Gottlieb Steen
& Hamilton LLP knew nothing about the ad until it was
published. He said the judge should recognize the fact that
Argentina is a country that "has to make statements on matters of
intense public interest," even if the statements aren't what the
lawyers would have drafted.
Argentine officials didn't immediately comment but said they
would issue a statement shortly.
Mr. Blackman also argued that American Task Force Argentina, an
organization that he says was created and funded by Elliott
Management Corp., has also made "malicious and evil" statements
about Mr. Blackman and his law firm. Elliott's NML Capital Ltd. is
one of the hedge funds suing Argentina in this case. Mr. Blackman
said in court the task force accused him of personally telling
Argentine President Cristina Kirchner to default, saying these
statements went "beyond any bounds of human decency."
American Task Force Argentina, which has posted comments on Mr.
Blackman and the debt dispute on their blog and on Twitter, didn't
immediately respond to a request for comment. Elliott declined to
comment.
Write to Nicole Hong at nicole.hong@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires