US judge temporarily suspends six creditors from joining Citgo auction

Rusoro Mining

08/05/2023 21:14

By Marianna Parraga
       HOUSTON, May 8 (Reuters) - A U.S. court of appeals has
granted Venezuela a temporary stay preventing six companies from
joining a proposed court auction of shares in a Citgo Petroleum
parent to enforce judgments for past expropriation of assets.   
    Since March, creditors including a unit of O-I Glass  OI.N ,
Huntington Ingalls Industries  HII.N , ACL1 Investments, Koch
Minerals and mining firms Rusoro Mining  RML.V  and Gold Reserve
 GRZ.V , have been granted rights to seize shares in the parent
of Venezuela-owned refiner Citgo, PDV Holding.
        The companies had won conditional attachments to a
federal case in which the judge has approved a process to
auction the shares to pay a $970 million judgment won by miner
Crystallex.
    The six hold arbitration awards or judgments that total
about $2.6 billion and wanted those awards to be included in the
auction.
    The appeals court on Friday suspended the attachments until
a panel could hear from Venezuela and the six companies to be
filed with the court by June. The proposed auction, which could
break up the seventh largest U.S. refiner to pay creditors, took
a giant step forward last month with a greenlight from the U.S.
Treasury.    
    "The motion suspends, under an emergency request, the
attachments the six additional companies had won to be part of
the auction until an appeal is introduced by us in the coming
weeks," Horacio Medina, head of a board supervising Citgo
Petroleum, told Reuters.
    The board had said in March it would appeal the decisions
granting the six firms rights to seize shares. The U.S. Court of
Appeals for the Third Circuit on Friday gave Venezuela until May
19 to file an appeal, moving a final decision on the attachments
likely to the third quarter, Medina said.
    Citgo split from Venezuelan state-run oil company PDVSA in
2019 under an order by Venezuela's National Assembly after the
U.S. imposed sanctions intended to oust President Nicolas
Maduro. Washington has since recognized the opposition-led
congress as the entity controlling the refining subsidiary,
extending protection to prevent its breakup at the hands of
Venezuela creditors.
    The freeze is separate from the progress of the original
Crystallex case, in which U.S. oil producer ConocoPhillips
 COP.N  also received an attachment for a $1.3 billion claim. 
    Earlier this month, U.S. officials told the court the U.S.
will not block the auction or settlement talks, paving the way
for a potential seizure or negotiated deal with creditors of
Venezuela's most-prized foreign asset. A U.S. Treasury license
would still be needed to complete any sale.
    "This is just a temporary lifesaver for us," Medina said,
adding that talks over possible payment arrangements with
several creditors have not been interrupted even amid the
court's decisions. 
    Last week, the chief of Venezuela's opposition-led congress
complained about the U.S. change of position on the protection
of the Venezuela-owned facilities overseas, and prompted the
supervisory boards to preserve the assets.          

 (Reporting by Marianna Parraga and Gary McWilliams
Editing by Marguerita Choy)
 ((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters
Messaging: @mariannaparraga))