The Argentine government and holders of the country’s restructured bonds asked for an emergency stay to block orders by a U.S. Judge that prevent the country from paying interest on the debt next month without transferring $1.3 billion to owners of defaulted notes.

Holders of the restructured debt asked the federal appeals court in New York to enter an emergency stay while they appeal rulings by District Judge Thomas Griesa, claiming that concern about whether Argentina will default is causing the value of their bonds to drop, according to court papers provided by ASC Advisors, which handles public relations for their lawyers. The papers couldn’t be immediately confirmed with the court. Argentina also requested a stay, the Economy Ministry said.

Argentina is scheduled to make more than $3 billion in payments on the restructured bonds in December, lawyers told Griesa in a hearing this month. He ruled Nov. 21 that Argentina must pay the money it owes the so-called holdouts, led by a unit of billionaire hedge fund manager Paul Singer’s Elliott Management Corp., into an escrow fund while it appeals. The country has until Dec. 15 to comply.

“The stay will allow a full and fair hearing of all the arguments,” David Boies, an attorney representing the group, said Monday in an e-mailed statement. “The motion would ensure that interest payments to the bondholders continue while the appeal is decided.”

Bonds Plunge

Griesa ruled Nov. 21 that Argentina must pay the holders of its defaulted debt if it goes forward with next month’s scheduled payments. He declined Argentina’s request for a stay. Argentine stocks fell to a five-month low on news of the ruling. Argentina’s restructured dollar bonds have plunged 13 percent on average since his decision, according to data compiled by JPMorgan Chase & Co.

In an e-mailed statement, the Economy Ministry said that Griesa’s reading of the pari passu clause is unfair, and that a scenario where holdouts seek equal terms as investors who accepted swaps in restructurings could be debated in Congress.

“If Griesa had provided a payment formula pro rata that treated these participants and those in the same position in the terms that Argentina offered in 2010, that would have been consistent with the precedents allowed by Argentine law and could be debated by Congress,” the ministry said, adding that a formal appeal was filed in New York courts Monday.

Argentina said that Griesa’s Nov. 21 ruling is “an attempt at threatening the compliance of Argentina with its performing debt” and that due process is needed to “protect the continuity of the New York financial system, its financial agents and all sovereign debt holders.”

The case is NML Capital Ltd. v. Republic of Argentina, 12-105, U.S. Court of Appeals for the Second Circuit (New York).