Lisbon Court again rules in favor of BSJI in case against PDVSA

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Mar 20, 2024, 16:22 ET

Three-judge panel denies Venezuelan oil company's request to unlock $150 million in funds held by PDVSA's affiliates in Portuguese banks

SAN JUAN, Puerto Rico, March 20, 2024 /PRNewswire/ -- Banco San Juan Internacional (BSJI) announced today that a three-judge panel in Lisbon, Portugal agreed to keep in place an attachment of nearly $150 million in funds held in a Portuguese bank by affiliates of Petróleos de Venezuela, S.A., the Venezuelan state-owned oil company. This sum represents $84 million dollars in outstanding debt owed to BSJI, plus more than $60 million in accruing interest.

While other creditors have been engaged in litigation for years in proceedings before a Special Master in a Delaware court overseeing the sale of PDVSA's assets in the US, BSJI has quietly won multiple judgments against PDVSA in Europe.

First, in July of 2021, a commercial court in the UK, where the two companies had previously agreed to settle disputes, granted BSJI judgment and ordered PDVSA to repay money it owes to the bank. In so doing, the UK court dismissed PDVSA's claim that US sanctions against the Maduro regime prohibited it from paying its debts, allegedly relieving it from its contractual obligations. A UK appellate court thereafter denied PDVSA's request to appeal.

Last year, to recover liquid funds pursuant to the judgment, BSJI sought in Portugal to hold PDVSA affiliates liable for its parent company's debt—and requested the court to attach the affiliates' funds held in a Portuguese bank during the pendency of the case against them. The Lisbon court sided with BSJI and granted the requested attachment of not only the principal amount owed but, importantly, 7 years of accruing interest, pending adjudication against the PDVSA affiliates.

Last month, a three-judge panel in Lisbon court rejected the request of PDVSA's affiliates to free the funds, choosing instead to keep the attachment in place for the duration of the court proceedings.

Although recovering funds from a debtor's corporate affiliates is rare under US and international law, the court in Lisbon agreed with BSJI arguments and deemed the affiliates to be "instruments/arms" of PDVSA.

The judge who granted the initial attachment will preside over the main proceedings, which is expected to occur this Summer or Fall.

"We looked for assets where no one else did and it is paying off," said Hector Vazquez, BSJI's Chief Executive Officer. "We look forward to pursuing our claims and vindicating our claims, no matter how long it takes."

SOURCE BSJI