Judge Orders Venezuela’s PDVSA to Pay $2.86 Billion to Bondholders

0
90

“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.

Signup for the USA Herald exclusive Newsletter

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.