A US judge ordered Argentina and New York-based hedge funds Tuesday to urgently reach a deal to avoid Buenos Aires defaulting over more than $1.3 billion in debt.
Presiding over a hearing in his Manhattan courtroom, federal judge Thomas Griesa refused to grant a request from lawyers for the South American country asking that a US Supreme Court ruling be suspended.
The lawyer appointed by Griesa to mediate an agreement between the two sides has scheduled another meeting on Wednesday to find a solution before Argentina could be forced to default on July 31 -- for the second time in 13 years..
"A default is the worst thing. I don't want that. People will be hurt," Griesa told the courtroom.
He urged the parties to "work continuously," saying "there's not a lot of time."
"The most important is to avoid a default at the end of July," the judge said, striking a rare conciliatory tone.
Last month, Griesa blocked Argentina from paying a portion of its restructured debt, saying no payment could be made unless it also pays NML Capital and other funds owed $1.3 billion.
As a result, Buenos Aires missed a payment on June 30, giving the country a one-month grace period to strike a deal before the restructured bond holders declare it in default.
Hedge funds, mainly NML Capital and Aurelius Capital Management, claim the money and refused to join other bondholders in the 2005-2010 restructuring of Argentina's defaulted debt.
Argentine President Cristina Kirchner's government has accused the hedge funds, whom it has dubbed "the vultures," and Griesa of wanting to drag the country into defaulting on the payments.
Her chief of staff, Jorge Capitanich, insisted in Buenos Aires: "We need the stay -- a suspension of the order calling for (Griesa's) ruling to be implemented."
With the country's foreign reserves below $30 billion, Argentina fears that any payments to the hedge funds could further weaken its finances.
Argentina has argued that paying the full worth of the bonds held by the hedge funds is unfair to the 92 percent of creditors who joined the restructuring taking a huge 70 percent writeoff.