On December 22, US District Court judge granted motion from Red Tree for the summary judgment against PDVSA and PDVSA Petróleo. Back in 2019, Red Tree sued Venezuela state-owned company and PDVSA Petróleo for unpaid principal plus interest due under two note agreements and notes issued thereunder. The original issuer of the loans was General Electric Capital Corp. It lent PDVSA approximately $450m in 2015 and later assigned the notes to Red Tree. The litigations originally commenced in New York state court but were removed by PDVSA to federal court. Shortly after the removal PDVSA moved to stay the actions for 120 days referencing political instability in the country and the lack of full access of Guaido’s team to the personnel and the documents. The stay remained in place until 1 June 2020 when the judge rejected motion from defendants to further extend the stay. Following discovery process, in August 2021 PDVSA filed their opposition to the motion for summary judgment. Among its arguments PDVSA claimed that US sanctions imposed against Venezuela in 2017 made it impossible to repay the notes. However, the judge rejected the arguments, pointing out that the term “new debt” as used in Executive Order 13808 was reasonably clear in meaning and as such it did not apply to preexisting debt.
Following the order, on 23 December Red Tree submitted proposed final judgement stating $157m as total amount owned as of 23 December 2021. Defendants now have 7 days to respond.
Earlier in December, another federal judge in New York rejected the same argument from PDVSA and ordered PDVSA to repay a $166m to Dresser-Rand Co.
For Venezuela bonds, the de-jure and de-facto administrations disagree on how bondholders should look at prescriptions periods. On 28th September 2020, Venezuela’s opposition-designated attorney general, appointed by National Assembly President Juan Guaido, published a statement saying that it is the view of the Guaido team that the contractual prescription period has not begun to run in respect of an overdue amount of principal or interest payable under any of the bonds issued by the government. According to this statement, the 10 and 3 year periods set out in the prescription clause of most Venezuela, PDVSA and ELECAR bonds will not begin to run unless and until: - the Fiscal Agent receives the full amount owed by the Republic and
- the holders have been notified of such event.
The attorney general also indicated that the statutory limitation period of six years under the laws of New York still applies. This was preceded, however, by the launch on 15th September 2020 of the Maduro conditional offer and a subsequently imminent statement from Maduro’s finance minister Delcy Rodriguez who highlighted that with the third anniversary for the first missed bond payment in 2017 coming soon, prescription deadlines for interests would expire. Under the offer, bondholders would agree to renounce rights to litigate and in exchange prescriptions deadlines would be waived.
http://www.mppef.gob.ve/comunicados-oficiales/
The Maduro conditional offer expired on 14th March 2021 and won’t be extended again, however the government said it will keep talking with Venezuela, PDVSA and Electricidad de Caracas bondholders in order to reach agreements under the same conditions as those with whom the Tolling Agreements are entered into. The proposed mechanism would require licenses from the US Treasury Department's Office of Foreign Assets Control, which administers sanctions. |
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