A U.S. court has granted a stay of 120 days in a legal case that a hedge fund brought against Venezuela’s state-owned oil company PDVSA for unpaid debt amount to US$182 million. The court, according to Reuters, cited the “political situation” in Venezuela as reason for the stay.
The stay was granted on two separate lawsuits brought by Red Tree Investments against PDVSA for its alleged default on four separate loans.
The political situation the court referred to is becoming increasingly complicated with two governments and two PDVSA boards, the first loyal to Maduro and the second appointed by self-declared interim president Juan Guaido, whom the United States wholly supports in his attempt to overthrow the Maduro government.
“I expect that this precedent in the NY courts will help to grant a stay in other claims,” a Guaido official, special prosecutor Jose Ignacio Hernandez, told Reuters. Guaido appointed Hernandez a representative of Venezuela abroad.
The other claims Hernandez mentioned in his comment likely mean the ConocoPhillips court-awarded compensation of US$8.7 billion for the forced nationalization of its Venezuelan operations by the Hugo Chavez government and Crystallex’s US$1.2-billion compensation, also awarded by a court. Guaido is contesting both awards, seeking to revoke them.
Crystallex, which is no longer in business, has been seeking to seize PDVSA’s U.S. assets—refiner Citgo—as compensation for the nationalization of one gold mine in Venezuela. This has proved hard to achieve, but the Canadian mining company did manage to get the US$1.2 billion court award. Its future attempt to seize a majority stake in Citgo may be doomed: Citgo is under the control of a board affiliated to Guaido and supported by the U.S. government and U.S. courts tend to follow the government’s lead in such politically sensitive cases, as the latest court decision on hedge fund Red Tree Investments suggests.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.