U.S. District Judge Thomas Griesa on Thursday called Argentina's proposed debt restructuring plan "illegal" but stopped short of holding the country in contempt, saying that would not help resolve the dispute that led to the nation's second default in a dozen years.
Griesa said proposed legislation announced on Tuesday by President Cristina Fernandez would violate orders he imposed favoring creditors who refused to accept restructured bonds following the country's 2002 default on $100 billion in debt.
"It is illegal, and the court directs that it cannot be carried out," Griesa said at a hearing in New York.
But the judge declined to hold Argentina in contempt despite the urging of the two leading holdout creditors, saying such a finding would not "add anything to the scales" to encourage a settlement.
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