The troubled Argentine government is sending a team to New York to discuss a settlement with holdout funds, while it continued to express its dislike over the "biased" order from a US judge.
The government will send its team on 7 July to negotiate with the so-called vulture funds through a court-appointed mediator.
Despite the bitter spat with the holdout funds, the talks will be crucial for Argentina, as a failure to reach settlement could force the country into default, making it further difficult to obtain funding from international capital markets.
Argentina's reputation among international investors had also been tainted due to its spat with Spanish oil company Repsol over the nationalisation of energy company YPF, in which Repsol had a majority stake. Nevertheless, Repsol and Argentina had settled their dispute.
"At some point, Argentina will have no choice but to negotiate. I think that Argentina harbours more ire for the holdouts than for Repsol, and that this is a more public and longer spat than Repsol," David Tawil of Maglan Capital, a New York-based hedge fund focused on distressed debt and equities, told IBTimes UK.
Speaking about the settlement, Tawil said "the holdouts are ready to relax terms".
"They've previously said that they will take the majority of their payout in debt. Although the holdouts have done everything possible to prosecute their legal and contractual rights, I don't think that they want to be known as the ones who drove Argentina into default," he added.
Argentina has been engaged in a long legal battle with hedge funds, Elliott Management and Aurelius Capital, which refused to take part in the country's debt restructurings. About 92% of the country's creditors agreed to swap debts and accept less money.
Earlier, US District Judge Thomas Griesa ordered that Argentina must compensate the holdout creditors at the same time it pays investors who took part in its debt restructuring.
Argentina claimed that if the country paid the suitors on their terms, it would lead to claims from other holdouts of around $15bn in debt.
The government has been critical of the decision of Griesa, saying it is "absurd" and the judge has been assisting "global usurers".
"A lot of officials in the United States say its judicial branch is independent," Reuters quoted as saying Argentine cabinet chief Jorge Capitanich. "But it is not independent of the vulture funds because its decisions show clear partiality."
The government's coupon payment to restructured bondholders through a New York bank had earlier been blocked by Griesa, but the government is of the view that the money it had deposited with the bank now belongs to the holders of its restructured paper.
"As far as we are concerned, Argentina has fulfilled its obligations," Capitanich said.
"Argentina can argue that they've made the payment to the bank, as custodian for the bondholders; the fact that the bank cannot remit the payment to the bondholders is inconsequential to the issue of whether Argentina has fulfilled its obligations," Tawil said when asked about the alternatives for Argentina to avoid default.