A US judge ruled Argentina in contempt of court Monday for its attempts to skirt his block on payments to holders of the country's restructured debt.
Federal district judge Thomas Griesa said Buenos Aires had acted illegally to avoid his orders to first pay off hedge funds that sued the country for full payment on their bonds.
He noted it is "a rare thing" for a country to be ruled in contempt in a US court, but pointed to the actions of the Argentine government to skirt his orders in the long-running case.
"The court holds and rules that those proposed steps are illegal and cannot carry on," Griesa said.
But Griesa held off on deciding a penalty, which could amount to a $50,000-a-day civil fine as requested by the hedge funds.
Argentina -- which maintains it has tried to pay but is being blocked by US moves -- then slammed as illegal Griesa's latest ruling.
"The ruling by Judge Thomas Griesa saying that the Argentine Republic is in contempt of court, violates international law, the UN Charter, and the OAS charter," a foreign ministry statement said, referring to the Organization of American States.
Earlier this year, Griesa effectively 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.
Because Argentina refuses to pay off the two, calling them "vulture funds", Griesa's order forced the country to default on a debt service payment to restructured bondholders at the end of July.
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