A New York federal judge has ordered Petróleos de Venezuela SA (PDVSA), Venezuela’s state-owned oil company, to pay $2.86 billion to bondholders, marking the latest chapter in a yearslong legal battle over the country’s defaulted sovereign bonds and the ownership of Citgo Petroleum Corp.
In a ruling issued Friday, U.S. District Judge Katherine Polk Failla entered final judgment against PDVSA and its subsidiary PDVSA Petróleo SA, finding them jointly and severally liable for the debt. The judgment also dismissed PDVSA’s own lawsuit against MUFG Union Bank NA (the bond trustee) and GLAS Americas LLC (the collateral agent) with prejudice.
Judge Failla said there was “no just reason for delay” in entering judgment, concluding that the matter was ripe for resolution following her September ruling that the disputed PDVSA 2020 bonds were validly issued under Venezuelan law.
The $2.86 Billion Judgment
The total judgment stands at $2.86 billion, and Judge Failla ordered that over $609,000 in interest will accrue each day after Friday until payment is made. The court deferred a ruling on attorney fees and litigation costs—expected to total tens of millions of dollars—until after PDVSA’s forthcoming appeal to the Second Circuit Court of Appeals.
“Deferring consideration of the fee petition pending the outcome of plaintiffs’ appeal will better conserve both judicial and party resources,” PDVSA said in a letter to the court, a position Judge Failla accepted.
Years of Litigation Over Citgo-Backed Bonds
The dispute centers on PDVSA’s 2016 bond swap, which allowed investors to exchange near-term debt for new bonds maturing in 2020 and secured by 50.1% of Citgo Holding Inc., the U.S.-based parent of Citgo Petroleum.
In 2019, PDVSA—by then under the control of an ad hoc board appointed by opposition leader Juan Guaidó—filed suit in New York, arguing the 2020 notes were “illegal and void” because President Nicolás Maduro’s government had not received authorization from Venezuela’s National Assembly before pledging Citgo as collateral.
Initially, the district court ruled in 2020 that New York law governed the validity of the bonds and upheld them as enforceable. But in 2024, the Second Circuit Court of Appeals asked New York’s Court of Appeals to clarify which law applied. The state’s high court held that Venezuelan law governed the bonds’ validity, sending the case back to Judge Failla to decide whether the notes were valid under Venezuelan statutes.
After what she described as an “exhaustive review of Venezuelan law,” Judge Failla ruled in September 2025 that the bonds were valid, reaffirming summary judgment for MUFG Union Bank and GLAS Americas.
