That's the exact thing - they have the money to pay, but they have to give a proportion of that money to the holdout bondholders (the "not selective" part), and they refused to do that, despite all the negotiations.

Courts didn't rule that they can't pay, courts ruled that they can't ignore the other bondholders when paying.

[edit] A car analogy - if a court says you can't drive until you pay your parking fines, then it doesn't mean that you're maliciously completely prevented from driving, it simply means that you're compelled to pay the fine at last.