Lawyers for Argentina's government said in court papers filed late on Friday that a trial judge was "wrong to ignore the chorus of voices" who opposed his November order on payments to so-called "holdout" creditors.

Those payments, to a court-controlled escrow account, would threaten the service of $24 billion in restructured debt, Argentina's lawyers wrote in papers filed in the 2nd U.S. Circuit Court of Appeals in New York.

"There is no authority permitting a U.S. court to order a sovereign to bring its immune assets into the United States in order to 'turn over' or distribute them to its creditors," lawyers for the Argentine government said in the 69-page filing.

The appeals court is expected to decide next year whether to force Argentina to pay the $1.33 billion to investors in the defaulted debt. The decision could have broad impact on the ability of governments to raise money by selling bonds and on strained countries' response to economic crises.

The case stems from Argentina's $100 billion sovereign debt default 11 years ago. Argentina is trying to avoid paying the holdout creditors, who refused to take part in massive debt restructurings in 2005 and 2010.

About 92 percent of the bonds were restructured, giving holders between 25 cents and 29 cents on the dollar.

But the holdouts, led by Elliot Management Corp affiliate NML Capital Ltd and the Aurelius Capital Management funds, demanded to be paid in full. Argentina calls the holdouts "vultures" and has resisted.

The case has run for years in U.S. courts. Oral arguments before the 2nd Circuit on the appeal are set for February 27, 2013.

A decision against Argentina would deal a setback to President Cristina Fernandez, who is trying to avert the fallout of a potential technical default on tens of billions of dollars of debt.

In a statement late on Friday, an NML spokesman said Argentina was well placed to compensate the holdouts, citing its "more than $43 billion in foreign currency reserves" and billions more in other resources.

"Today's filing by the Republic once again demonstrates Argentina's irrational persistence in evading its contractual obligations and the orders of U.S. courts," said Peter Truell, a spokesman for NML.

Also on Friday, the U.S. government filed a friend-of-the-court brief in support of Argentina's bid for the appeals court to reconsider its October ruling that found Argentina had improperly discriminated against bondholders who did not participate in the debt swaps.

The U.S. government said countries needed leverage to garner broad creditor support for a restructuring. It cited the recent debt exchange in Greece as an example of a situation in which holdouts can threaten orderly bond restructurings.

JUDICIAL REPRIEVE

Following the appeals court's October decision, U.S. District Judge Thomas Griesa in Manhattan on November 21 commanded Argentina to put the payments for the holdouts into escrow by December 15.

But on November 28, the 2nd Circuit gave Argentina a reprieve, saying it did not need to make the escrow payment for now.

The battle has even extended to the 2-1/2 month seizure of the Argentine naval vessel ARA Libertad in Ghana at the request of NML. The boat was freed on December 19 following a ruling by an international admiralty tribunal.

In its court papers, Argentina said that if Griesa's orders were allowed to stand, "we may very well see the end of such restructurings and enter an era where debt crises are unresolvable. This will increase litigation, not reduce it."

At the same time, the country's lawyers said Argentina understood the appeals court's desire to resolve the litigation, and "is prepared to do what it can to end it."

Argentina's lawyers said Fernandez was "prepared once again" to ask Argentina's Congress to end the litigation by treating the holdout bondholders the same as those who participated in the 2010 debt swap.

In a separate court filing, lawyers for holders of restructured bonds said that holdouts should not be treated better than "innocent" bondholders who took part in the swaps. The restructured bondholders include funds managed by Gramercy Financial Group LLC and BlackRock Inc (BLK.N), according to the court papers from the group.

The case is NML Capital Ltd et al v. Argentina, 2nd U.S. Circuit Court of Appeals, No. 12-105.

(Reporting by Jonathan Stempel, Nate Raymond and Martha Graybow in New York; Editing by Ron Popeski)

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