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The Venezuelan opposition led by Juan Guaidó has filed a lawsuit against holders of a bond issued by state-owned oil company PDVSA, claiming the debt should be annulled and that creditors do not have the right to seize a 50.1 per cent stake of Citgo, the Texas-based oil refiner, which serves as the bond’s collateral.
The legal action comes just days after the US government extended an eleventh-hour lifeline to the Guaidó team and temporarily shielded Venezuela’s crown jewel from seizure by creditors. The opposition government, which is recognised by the US and almost 60 other nations as the legitimate one, owed creditors $913m on Monday and had indicated before this week’s payment deadline that it would not be able to service the bond set to mature next year.
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Without the protective measure from the US Treasury department, which bars bondholders for 90 days from collecting on the collateral tied to the bond, the creditors could have laid claim on Citgo.
PDVSA’S ad hoc board, which is a plaintiff and filed the lawsuit against the trustee of the bonds, MUFG Union Bank, in the US District Court for the Southern District of New York, claims the debt is illegal because the government led by Nicolás Maduro did not ask permission from the opposition controlled Congress to issue the debt and use Citgo as collateral.
Legal experts and investors have pushed back on this argument, warning it may not stand up in a US court.
