Argentina debt mediator postpones start of New York talks

NEW YORK Wed Jul 23, 2014 11:42am EDT

New York financial trial lawyer Daniel Pollack exits the U.S. District Court for the Southern District of New York in Lower Manhattan, June 27, 2014. REUTERS/Brendan McDermid

New York financial trial lawyer Daniel Pollack exits the U.S. District Court for the Southern District of New York in Lower Manhattan, June 27, 2014.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - A court-appointed mediator in the Argentina debt dispute said he had to push back by a day the start of the latest round of settlement talks on Wednesday because the Argentine delegation "could not get here in time."

Daniel Pollack, a New York lawyer appointed to oversee the settlement discussions, had scheduled a meeting for 10 a.m. EDT (1400 GMT) after a U.S. judge on Tuesday ordered the parties to meet "continuously" until a deal is reached.

Pollack said in an email on Wednesday the scheduled meeting in New York "had to be postponed, because the Argentines said they could not get here in time." He later said the meeting had been rescheduled for Thursday at 12 p.m. EDT.

Argentina faces a July 30 deadline to cut a deal with bondholders who demand full payment for defaulted bonds, instead of a reduced amount. Absent an agreement, it could default on its debt at the end of the month for the second time in the 21st century.

Argentina, which defaulted on about $100 billion in 2002, has been pushed to the brink of a fresh debt default by U.S. court decisions that it pay the $1.33 billion face value of the bonds plus interest to bondholders who did not participate in debt swaps in 2005 and 2010. The bondholders who participated in the debt swap accepted receiving a fraction of the bonds' full value.

The July 30 deadline faced by Argentina is to pay holdouts led by Elliott Management's NML Capital Ltd and Aurelius Capital Management.

The country argues paying the holdouts would open it up to as much as $15 billion in claims from other investors and further strain its financial condition.

The originally scheduled Wednesday meeting with Pollack, a partner at the law firm McCarter & English, was scheduled at a hearing Tuesday before U.S. District Judge Thomas Griesa, who called the possibility of default "the worst thing I can envision."

Pollack, who was appointed June 23 as a mediator, has been holding meetings with the parties, publicly acknowledging talking twice with Argentine officials.

After Tuesday's hearing, NML issued a statement saying it was prepared to meet with Pollack AND was "confident this matter could be resolved quickly if Argentina would join us in settlement discussions."

In a statement released late Tuesday, the Argentine Ministry of Economy and Public Finance said Griesa was "threatening the Argentine Republic with what he insists on calling 'default.'"

The possibility of a default came after Argentina last month made what the ministry said was $1.15 billion payment for its restructured bondholders. That money included $539 million deposited indentured trustee Bank of New York Mellon Corp.

But Griesa deemed the payment a violation of injunctions that required Argentina to pay the holdouts the $1.33 billion the next time it paid the restructured bondholders, and told the bank to return the money.

BNY Mellon has sought to hold onto the money to minimize its liability. Griesa on Tuesday told the bank and holdout creditors to try to reach an agreement that would minimize further litigation.

(Reporting by Nate Raymond in New York; Editing by Jeffrey Benkoe and W Simon)

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