Lawyers in Argentine debt dispute to meet

New York - A court-appointed mediator said Friday he would hold a meeting next week between lawyers for Argentina and creditors suing the country in a longstanding dispute over defaulted debt.

Daniel Pollack, the New York lawyer appointed to oversee settlement talks, confirmed that he anticipated a meeting, declining to provide further details.

The meeting is expected to focus on how settlement talks should proceed in January after the expiration of a bond clause that the Argentine government has cited as a major stumbling block in cutting a deal, a person familiar with the matter said.

Argentina contends the so-called Rights Under First Offer, or RUFO, clause prohibits it from voluntarily paying the holdouts suing for full payment. The clause expires December 31.

Argentina defaulted in July for the second time in 12 years after refusing to honour court orders to pay $1.33bn plus interest to bondholders - a group of hedge funds - suing for full payment on defaulted bonds.

The hedge funds, led by NML and Aurelius Capital Management, had spurned the country's 2005 and 2010 debt restructurings, which resulted in exchanges for about 92% of the country's defaulted debt.

Investors who exchanged bonds were paid less than 30 cents on the dollar.

The country's most recent default came after the US Supreme Court declined to hear Argentina's appeal of a ruling that it must pay the holdouts at the same time that it paid holders of the exchanged bonds.

US District Judge Thomas Griesa in Manhattan, who oversees the case at the District Court level, subsequently blocked Bank of New York Mellon Corp from processing a $539m interest payment on what Argentina says is over $28bn in debt.

The order sent Argentina on a course to default after no settlement was reached. Argentina has since appealed Griesa's order.

Griesa last month held Argentina in contempt, calling "illegal" the country's plans to get around his rulings by making payments locally.

News of the meeting with Pollack was first reported by The Wall Street Journal.