$1.2B order entered against Petroleos de Venezuela: Q&As for PDVSA and Citgo commodity commercial and trading counterparties

By DLA Piper on October 15, 2018

By:

Robert J. Gruendel, Mark A. Waite, Deanna R. Reitman

The United States District Court for the District of Delaware has issued an order and supporting lengthy opinion allowing a judgment creditor holding a $1.2 billion judgment against the Bolivarian Republic of Venezuela to attach common stock owned by Petróleos de Venezuela, S.A. (PDVSA), the national oil company of Venezuela. The stock attached by the order is the common stock of PDV Holdings, Inc., which in turn is the parent company of Citgo. The case is Crystallex International Corporation v. Bolivarian Republic of Venezuela, C.A. No. 17-mc-151-LPS.

The order arises from a 2016 arbitration award in favor of the creditor which claimed that Venezuela wrongfully expropriated gold mines in or about 2011. PDVSA was not a party to that arbitration and was not accused of any involvement in the underlying matters giving rise to it. The arbitration award against Venezuela was confirmed by the United States District Court for the District of Columbia, and Venezuela filed an appeal of that judgment, which remains pending. Venezuela was not successful in its efforts to stop post-judgment collection efforts while it appeals that judgment. This new attachment proceeding and the order now entered against the PDVSA shares are part of the creditor’s post-judgment collection efforts.

PDVSA filed a notice of appeal to the United States Third Circuit Court of Appeals on August 10, 2018, which remains pending.

After PDVSA filed its notice of appeal, CITGO Holding, Inc. and CITGO Petroleum Corporation jointly urged the district court to stay execution of the writ of attachment to allow them to propose how to best accomplish the execution of the attached shares. Soon thereafter, the court issued an order temporarily staying execution of the writ of attachment and invited parties and non-parties alike to submit motions within seven days of the service of the writ of attachment on how to best effectuate the execution of the writ of attachment. Moreover, the court specifically invited PDVSA to file a motion under Rule 62(d) of the Federal Rules of Civil Procedure and post a supersedeas bond to stay execution of the writ of attachment pending the outcome of PDVSA’s appeal, which PDVSA has not done to date.