NEW YORK — A federal judge in Manhattan on Thursday said Argentina’s plans to evade his orders by failing to make required payments to US bondholders is illegal and cannot be carried out, but he stopped short of finding the South American nation in contempt of court.
US District Judge Thomas Griesa called the republic’s actions toward US bondholders ‘‘lawless’’ at the New York City hearing. However, he rejected requests by lawyers for US hedge funds to make a contempt finding, saying he wanted everyone to concentrate on an eventual settlement.
At an Aug. 8 hearing, Griesa had threatened Argentina with contempt, saying the nation’s leaders were making ‘‘false and misleading’’ statements as they ignored obligations to pay the hedge funds.
Argentina’s public statements have grown more defiant. President Cristina Fernandez this week announced plans to make interest payments to some bondholders through its own central bank rather than US banks subject to Griesa’s orders.
Argentina attorney Jonathan Blackman has repeatedly told the judge that the country is left with few options because any deal it reaches with US bondholders owed about $1.5 billion would obligate it to pay over $20 billion to other bondholders.
In a letter to the judge Wednesday, attorney Robert A. Cohen, on behalf of the US bondholders, said Argentina’s new proposal would offer his clients the same ‘‘stingy terms’’ that the hedge funds had declined twice before and force them to submit to Argentina’s ‘‘puppet bank’’ or ‘‘Argentina’s patsies’’ for payments.