Content Join OGEMID
 
  • Linkedin
  • Twitter
  • Rss

Transnational Dispute Management

Skip navigation

Transnational Dispute Management

The network for international arbitration, mediation and ADR, international investment law and Transnational Dispute Management

Join OGEMID

Transnational Dispute Management

The network for international arbitration, mediation and ADR, international investment law and Transnational Dispute Management

  • Sign in
  • Subscribe
  • Home
  • Sign in
  • About About
    1. Home
    2. About
    3. About TDM
    4. About TDM
    5. Founding Editor T.W. Wälde
    6. T.W. Wälde
    7. Editorial team
    8. Editorial team
    9. Contributing Authors
    10. Contributing Authors
    11. Subscriptions
    12. Subscriptions
  • Journal Journal
    1. Home
    2. Journal
    3. Browse Issues
    4. Browse
    5. Articles by Category
    6. By Category
    7. Articles by Author
    8. By Author
    9. Advance publication
    10. Advance publication
    11. Specials
    12. Specials
    13. Search
    14. Search
    15. Book reviews
    16. Reviews
  • Legal & Regulatory docs. L & r docs
    1. Home
    2. Legal & Regulatory docs.
    3. L&R by Country
    4. L&R by Country
    5. L&R by Category
    6. L&R by Category
    7. L&R recent additions
    8. L&R recent additions
    9. Search
    10. Search
  • Audiovisual library AV library
    1. Home
    2. Audiovisual library
    3. Audiovisual Library
    4. Audiovisual Library
    5. TDM/OGEMID Interviews
    6. TDM/OGEMID Interviews
    7. Conference presentations
    8. Conference presentations
  • OGEMID OGEMID
    1. Home
    2. OGEMID
    3. About OGEMID
    4. About OGEMID
    5. Suggest a topic
    6. Suggest a topic
    7. Guest programme
    8. Guest programme
    9. Seminar programme
    10. Seminar programme
    11. Browse archive
    12. Browse archive
    13. Search
    14. Search
    15. Join
    16. Join
  • News & Events Events
    1. Home
    2. News & Events
    3. News
    4. News
    5. Events
    6. Events
  • Subscribe
Home > Legal & Regulatory docs.

Petroleos De Venezuela SA - PDVSA Petroleo SA - PDV Holding Inc v MUFG Union Bank NA and Glas Americas Llc - United States District Court Southern District of New York Case 1-19-cv-10023 - Complaint for Declaratory and Injunctive Relief - 29 October 2019

  • Sign in to download document
Country
  • United States
  • Venezuela
Year

2019

Summary

NATURE OF THE ACTION

1. This is an action for declaratory and injunctive relief. Plaintiffs seek a judgment declaring that certain notes issued by PDVSA, purportedly guaranteed by PDVSA Petróleo, and purportedly secured by a pledge of collateral from PDV Holding (as defined more fully below, the "2020 Notes"), as well as the related indenture and pledge agreement, are invalid, illegal, null and void ab initio, and thus unenforceable. Plaintiffs also seek an injunction permanently enjoining any exercise of purported rights, remedies, or privileges with respect to the 2020 Notes or the purportedly pledged collateral-50.1% of PDV Holding's shares of CITGO Holdings, Inc. (the "CITGO Shares"), which owns 100% of CITGO Petroleum Company ("CITGO"), a major, U.S.-based oil refiner.

2. PDVSA is a state-owned enterprise of the Bolivarian Republic of Venezuela ("Venezuela") which manages and oversees all of Venezuela's oil and gas operations. PDVSA Petróleo and PDV Holding are wholly-owned subsidiaries of PDVSA. PDV Holding, in turn, owns CITGO. The oil industry has long been the primary driver of Venezuela's economy, which has completely collapsed due to the disastrous policies of Hugo Chavez and Nicolas Maduro, leading to a humanitarian crisis of epic proportions. CITGO is critically important to any economic recovery and alleviation of human suffering in Venezuela.

3. When the 2020 Notes were issued in 2016, PDVSA was controlled by Maduro, the Chavez protégé who became president of Venezuela after Chavez's death in 2013. After a rigged election in 2018 in which Maduro illegitimately claimed victory, Venezuela's democratically elected National Assembly declared the presidency vacant and, in accordance with the Venezuelan Constitution, the president of the National Assembly, Juan Guaidó, became the country's interim president. Guaidó has since been recognized by the U.S. and over fifty other nations as the rightful President of Venezuela.

4. For more than a decade, the Chavez regime squandered much of Venezuela's oil revenues on political patronage and other wasteful endeavors while underinvesting in PDVSA's domestic production and refining capacities. When chronic mismanagement and neglect met with falling oil prices in 2014, oil revenues plummeted. But the Maduro regime continued to pursue the policies that led to PDVSA's financial undoing, including continued prioritization of debt service over critical investments and operational expenditures, and issuance of unsustainably expensive debt. This odious borrowing included the issuance by PDVSA of certain unsecured notes due in 2017 (as described more fully below, the "2017 Notes").

5. By mid-2016, it was becoming clear that PDVSA did not have the money to repay the 2017 Notes, and a default would have spelled political disaster for Maduro. To stave off default, the Maduro regime unilaterally and illegally orchestrated an exchange offer by which PDVSA exchanged the 2017 Notes - which were unsecured and issued in local currency - for the 2020 Notes, which were issued in U.S. dollars (as described more fully below, the "Exchange Offer"). While PDV Holding is not a party to the indenture governing the 2020 Notes and has no obligation to repay them, PDV Holding's principal asset - the CITGO Shares - were purportedly pledged to secure PDVSA's debt.

6. The holders who accepted this proposal provided the Maduro regime with a financial and political lifeline. Worse yet, these holders did so knowing that the Exchange Offer was initiated without the required authorization of the National Assembly. In fact, when the transaction was announced, the National Assembly declared it illegal and called for an immediate investigation - an investigation that was promptly quashed by the Maduro-controlled Constitutional Chamber of the Supreme Tribunal of Venezuela (the "Venezuelan Supreme Tribunal").

7. Under the Venezuelan Constitution, the 2020 Notes, the indenture pursuant to which the notes were issued (as described more fully below, the "Indenture"), and the pledge and security agreement pursuant to which the notes were purportedly secured (as described more fully below, the "Pledge Agreement") are contracts in the national public interest and therefore required authorization by the National Assembly. Because they were not authorized by the National Assembly, they are invalid, illegal, null and void ab initio under applicable Venezuelan law. As set forth below, the lack of National Assembly authorization was widely reported at the time of the Exchange Offer.

8. PDVSA is now governed by an ad-hoc administrative board (the "Ad-Hoc Board") appointed pursuant to a decree of Interim President Guaidó and recognized by the U.S. government and U.S. courts as the only legitimate corporate body with authority to govern its affairs. The Ad-Hoc Board has, in turn, appointed new boards of its subsidiaries, including PDV Holding. On account of the illegal Exchange Offer orchestrated by the Maduro regime, PDV Holding is now facing the loss of its controlling interest in CITGO.

9. On October 28, 2019, PDVSA did not make a $913 million principal and interest payment purportedly due on the 2020 Notes, triggering an Event of Default. Last week, in anticipation of this possibility, the U.S. issued General License 5A, forbidding Defendants from exercising default remedies until January 22, 2020. Unless this Court grants the relief sought in this action by that time, CITGO will be lost and the Guaidó government's efforts to restore democracy and the rule of law, rebuild Venezuela's economy, and ameliorate the country's ongoing humanitarian crisis will suffer a devastating blow. Accordingly, Plaintiffs seek declaratory and injunctive relief to avoid this cascade of irreparable harms.

...

To download this document you need to be a subscriber

Sign in

Forgot password?

Sign in

Subscribe

Fill in the registration form and answer a few simple questions to receive a quote.

Subscribe now

Documents missing? Documents to share? Let us know!

If you know of documents which are currently missing from our Legal & Regulatory database do let us know. You can send them directly to us for inclusion in the database, anonymously or otherwise.
Learn more here

Call for contributions

TDM Call for Papers: Old and New Disputes in Aerospace Law

Prof. Yun Zhao and Dr. J. Górski

  • Prof. ZHAO Yun
  • Dr. Jedrzej Gorski

TDM Call for Papers: The Future of Investment Law in Latin America

Dr. Sébastien Manciaux and Francisco Victoria-Andreu

  • Sebastien Manciaux
  • Francisco Victoria-Andreu

TDM Call for Papers: Islamic Finance and Dispute Resolution

Professor Dr A F M Maniruzzman

  • Professor Dr A F M Maniruzzman

Invitation to write: Overlap between Bankruptcy / Insolvency Proceedings and Arbitrations

TDM Editorial Team

Transnational Dispute Management

TDM Call for Papers: The African Continental Free Trade Agreement (AfCFTA)

J. Chaisse, J. Górski, E. Laryea, M.M. Mbengue, and K. Olaoye

  • Prof. Julien Chaisse
  • Dr. Jedrzej Gorski
  • Prof. Emmanuel Laryea
  • Prof. Makane Moïse Mbengue
  • Kehinde Olaoye

TDM Call for Papers: International Investment and Competition Law in AND with the Global South

Prof. Leila Choukroune and Anu Monga

  • Prof. Leila Choukroune
  • Anu Monga
  • More
  • Contribute

Advance publication

Africa's Investment Treaty Practice with China: Are the Africa-China BITs Conducive to the Implementation of the AU Agenda 2063?

8 Jan 2021

G.M. Zagel

  • G.M. Zagel

Now available in TDM 1 (2021): Punitive Damages in the Context of Maritime Arbitration: Myth or Reality? Lessons Drawn from the American Perspective and the Existing Practice of the Society of Maritime Arbitrators

6 Jan 2021

N. Masumy

  • N. Masumy

The Return of the Home State to Investor-State Disputes: Bringing Back Diplomatic Protection?; Rodrigo Polanco - Book Review

6 Jan 2021

O. Svoboda

  • O. Svoboda
  • More
  • Contribute

Stay connected

Sign up for our email alerts.

  • Issues
  • Advance publication
  • News
  • Linkedin
  • Twitter
  • RSS

Join the debate

Want to join OGEMID, the leading on-line discussion platform for international dispute resolution?

Simply fill in the registration form to start your trial membership.

Download the app

  1. App store
  2. Google play

The Transnational Dispute Management Journal (TDM, ISSN 1875-4120) and OGEMID listserv focus on recent developments in the area of (investment) arbitration and dispute management, regulation, treaties, judicial and arbitral cases, voluntary guidelines, tax and contracting. Read our Terms & Conditions here, and our Privacy Policy here.

About TDM

  • Terms & Conditions
  • Contribute
  • Subscriptions
  • Contact
  • Help

Other publications

  • Oil, Gas & Energy Law Intelligence (OGEL)

© 2004 - 2021. Published by MARIS.

  • Home
  • Contribute
  • Subscriptions
  • Contact
  • Help