May 6, 2019 / 11:26 PM / 17 days ago

U.S. court grants stay in PDVSA debt cases due to Venezuela "political situation"

CARACAS, May 6 (Reuters) - A U.S. court granted a 120-day stay in a legal battle between a hedge fund and Venezuela’s state-run oil company, PDVSA, over unpaid debt in light of the country’s “political situation,” according to a ruling filed on Monday.

The move will delay proceedings in two suits brought by Red Tree Investments against PDVSA in New York courts for $182 million for allegedly defaulting on four loan agreements. The ruling could set a precedent for other suits against PDVSA and Venezuela’s government, which together have defaulted on some $8 billion in debt.

“I expect that this precedent in the NY courts will help to grant a stay in other claims,” said special prosecutor Jose Ignacio Hernandez in a text message. Hernandez has been tapped by Venezuelan opposition leader Juan Guaido with representing the country overseas.

Guaido in January invoked Venezuela’s constitution to assume an interim presidency, arguing President Nicolas Maduro’s 2018 re-election was illegitimate. Guaido has been recognized by the United States and most Western countries as the South American nation’s rightful leader.

But Maduro, a socialist who calls Guaido a U.S.-backed puppet seeking to oust him in a coup, retains control of state functions. Lawyers for Guaido had requested the stay since Guaido cannot “access the personnel and documents of the government and its instrumentalities.”

Daniel Salinas, an attorney for Red Tree, declined to comment on the ruling. Red Tree had previously argued that granting the stay would amount to an “indefinite delay.”

Guaido is also seeking a stay in a court battle brought by Canadian mining company Crystallex, which is attempting to seize shares in U.S. refiner Citgo, a PDVSA subsidiary, to collect on an arbitration award in compensation for Venezuela’s expropriation of a gold mining project.

Separately, his legal representatives are seeking to annul an $8.7 billion arbitration award to U.S. oil producer ConocoPhillips, also as compensation for expropriation.

Reporting by Luc Cohen, Editing by Rosalba O'Brien

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