New York court drops lawsuit against PDVSA for more than $487 million

The ad hoc PDVSA committee endorsed by U.S. authorities claimed a new legal victory in the Southern District Court of New York as it rejected the Syracuse Hills company’s request for a $487 million overpayment in violation of a promissory note issued by the Venezuelan state oil company to conduct the litigation.

According to a note from a special PDVSA committee, the practice violates New York State’s champerty law, which prohibits such operations.

The court therefore granted summary judgment in favor of PDVSA and dismissed Syracuse University’s claim for summary damages in excess of $487 million.

In 2021, Syracuse University sued PDVSA in the Southern District of New York, seeking “hundreds of millions of dollars” in damages for PDVSA’s failure to pay notes with interest rates of 5.375% to 12.75% on the company’s properties.

However, New York’s champerty doctrine prohibits the purchase of securities for the purpose of bringing a lawsuit.

The District Court found that Syracuse was a shell company formed in Panama for the sole purpose of suing PDVSA and concealing the identities of the ultimate owners and beneficiaries of such operations.

The title that Syracuse received had been transferred to him by the owner so that he could initiate the relevant litigation. According to the district court’s ruling, the champerty law prohibits such transactions and held that the transfer of debt instruments solely for the purpose of initiating litigation was invalid.

This victory paves the way for favorable outcomes in other cases related to PDVSA’s financial securities, such as the VR Global case last April, which was dismissed due to a lack of substantial evidence by the defendants.”

The same thing happened in the PDVSA 2020 bonds case, where last July the Second Circuit Court of Appeals affirmed the position held by the Venezuelan Petroleum Authority in the United States since the litigation began in 2019. Venezuelan law governs the issuance of the bonds.

In this sense, this court reverses the district court’s original judgment and remands the case for retrial.

The PDVSA ad hoc board is pleased with the District Court’s decision in the Syracuse case, which vindicates its ongoing efforts to protect the interests and assets of PDVSA in the United States.

Likewise, we call on PDVSA’s legitimate creditors to consider the possibility of agreeing to a tolling agreement and to work towards a negotiated solution to its debt.

According to NP information