BANK OF NEW YORK MELLON CORPORATION (THE) 
The hearing before U.S. District Judge Thomas Griesa in Manhattan, set out in an order issued late Wednesday, would be less than a month before a Dec. 31 interest payment by Argentina on the bonds is due.
Citigroup has said it faces regulatory and criminal sanctions by Argentina, which defaulted again in July, if it cannot process the country's interest payments on U.S. dollar-denominated bonds issued under Argentine law.
Argentina defaulted in July after refusing to honour a court order to pay $1.33 billion (829.80 million pounds) plus interest to so-called "holdout" bondholders led by Elliott Management's NML Capital Ltd and Aurelius Capital Management when it paid holders of bonds swapped during the country's 2005 and 2010 debt restructurings.
The hedge funds had spurned Argentina's past restructurings, which resulted in exchanges for about 92 percent of the country's defaulted debt. Investors who accepted Argentina's terms were paid less than 30 cents on the dollar on average.
Griesa, who oversees the litigation, in July blocked Bank of New York Mellon Corp from processing a $539 million interest payment on what the country says is over $28 billion in restructured debt. That order sent Argentina on a course to default after failing to reach a settlement with the holdouts.
Separately, the federal appeals court in New York on Thursday scheduled a Dec. 17 oral argument for Argentina's appeal of a September 2013 order from Griesa, requiring the country and 29 non-party banks to comply with dozens of subpoenas and information requests from the holdouts.
Argentina said these demands were overbroad, and that the holdouts should not be allowed to pursue property protected by treaty or federal law. The holdouts said Argentina cannot be trusted to decide which property is immune from their claims.
Citigroup had sought Griesa's guidance on whether it could process interest payments it received from Argentina on bonds issued under its own laws.
Griesa has for the last two quarters allowed Citigroup's branch in Argentina to make one-time payments to bondholders. In a letter Tuesday, Citigroup urged the judge to schedule a hearing again on the holdouts' request to block the payments.
A spokeswoman for Citigroup declined to comment. Representatives for the holdouts either had no immediate comment or did not respond to requests for comment.
The hearing's scheduling came a day after the 2nd Circuit U.S. Court of Appeals in New York dismissed Argentina's appeal of Griesa's order directing BNY Mellon to hold onto the $539 million the country deposited with it.
(Reporting by Nate Raymond in New York; Additional reporting by Jonathan Stempel; Editing by Chizu Nomiyama and Grant McCool)
By Nate Raymond
