Photo via John Loomis

Judge Thomas Griesa has postponed making a decision on Argentina’s request to lift an injunction known as the “stay” regarding the conflict with holdout creditors suing the country over defaulted bonds. The injunction basically blocks Argentina from paying other creditors without also paying the holdouts. Although Griesa has shown willingness to do so, after a two-hour meeting yesterday, he refrained from making a decision and has postponed it until an undefined date.

“This has been a remarkable afternoon,” was Griesa’s only comment before leaving the court.

Last week, Argentina asked for Griesa to lift this injunction because it presented an obstacle to the deals that it had begun to strike with different bondholders by blocking banks from processing Argentina’s debt payments. Since the stay initially came into existence to guarantee that Argentina would sit at the negotiating table (something the former Kirchner administration refused to do: hence the injunction), the government argued that it was no longer necessary now that Argentina has shown the will to sit down and negotiate terms.

Of the 14 lawyers representing creditors present at yesterday’s hearing, only five have accepted Argentina’s offer. The hearing then became somewhat confusing, as one group of bondholders wants Argentina to be able to pay up now (i.e. for the stay to be lifted) while another group is asking for Griesa to hold off for 30 days (i.e. not enable Argentina to pay just yet). It would appear that the latter group thinks that the stay being lifted could potentially lead to the collapse of the multi-billion dollar settlement:

“The agreement is just on the edge of of being successful,” said Ted Olson, lawyer for Elliott Management. “Give peace a chance, [Griesa].”

Yes, a vulture fund lawyer apparently quoted John Lennon. This conflict has to end, guys.

On the other hand, Argentina’s lawyer Michael Paskin argued that Argentina deserved a final answer and that it needed to be able to raise money in the markets in order to pay off the holdouts, not further delay.

According to Ámbito, the reason for the proposed 30-day postponement is that the bondholders want more time to negotiate better terms and avoid the risk of not getting paid (i.e. that the injunction be lifted and Argentina not pay up).

In any case, Griesa is expected to make his decision known in the next few days.

As a reminder, on Monday, mediator Daniel Pollack made the historic announcement that the toughest holdout creditors, Elliott Management, and the Argentine government had reached an agreement over the payment of defaulted bonds in the ongoing vulture funds dispute. The transaction stands at US$4.65 billion, a 25 percent haircut on their original demands.

This is part of the ongoing vulture funds dispute, which boils down to this: after Argentina’s economic meltdown in 2001, the country defaulted on its international debt. A group of creditors, including NML, purchased some of the defaulted bonds and refused to accept debt restructuring plans in 2005 and 2010 that would have exchanged the original bonds for bonds worth 30 cents on the dollar, insisting instead the debt be repaid in full. Hence former President Cristina Fernández de Kirchner’s nickname for them, “vultures”: she also swore that Argentina would “never” pay. New York Judge Thomas Griesa ruled in the holdouts’ favor and Argentina is now faced with negotiating the payment.

For more on what has to happen for Argentina to put the vulture funds debacle to bed, check out this article by The Bubble.