In the CITGO auction process, a group of bondholders from PDVSA 2020 challenges before the Delaware Court the position of PDV Holding Inc. (PDVH) and the Bolivarian Republic of Venezuela, subsidiaries of PDVSA that accuse them of improperly influencing the sale of assets from the Venezuelan refinery.
The bondholders emphasize that their goal is to protect their rights as primary creditors and the collateral of 50.1% of CITGO Holding shares, without opposing a sale that respects their rights.
They clarify that they do not intend to dictate who should win the CITGO auction nor to be paid in full before others, but rather to ensure that their pre-existing rights under the 2016 Pledge Agreement are not harmed by any transaction.
They argue that their actions do not seek undue interference and that the resolution of their rights regarding the collateral is being handled in a separate court in New York. Finally, they assert that OFAC sanctions do not impede their ability to seek a judicial order.
Undue influences come from Gold Reserve
On June 30, 2025, the PDVSA 2020 Bondholders responded to letters from PDV Holding Inc. (PDVH) and the Bolivarian Republic of Venezuela dated June 26, 2025, in which they were accused of “undue influence.” In this communication addressed to the United States District Court for the District of Delaware, they reaffirm their position regarding their rights as creditors and the CITGO auction process.
The Bondholders characterized as unfounded PDVH and Venezuela’s suggestions that they are trying to “unduly influence the selection of a winning bid by threatening to seek an injunction.” They maintain that the undue influences before the court-appointed expert were “injected by Gold Reserve.”
Their stance has been consistent: they have no objection to any sale transaction that “does not violate or undermine their rights as structurally senior creditors.” However, they will “vigorously contest any transaction involving PDVH shares that unduly diminishes their rights to the collateral under the Pledge Agreement” through injunctive relief or other procedures.
False accusations from PDVH
In their communication to the court, they state that PDVH’s claim that the 2020 Bondholders seek “to prevent the selection of any bid that does not pay them in full” is “demonstrably false.”
They reiterate that bidders are free to structure transactions that do not implicate their rights or seek a resolution with them to “effect a transaction that would otherwise face, in the absence of an agreement, a significant risk of not closing.”
They have not taken the position that “they and only they should be paid first and in full, before any secured creditor in the Sale Process.” Their goal is “to preserve their pre-existing rights.”
Jurisdiction and Injunctive Process
They also refer to PDVH’s erroneous claim that the 2020 Bondholders seek “injunctive relief in these proceedings.” This is false, they argue, and remind that they have repeatedly stated that they only defend their rights under the Pledge Agreement “correctly before the Southern District of New York.” They assert that “any litigation regarding whether the use of CITGO assets to finance a bid violates the Deed and the Pledge Agreement would also be subject to the jurisdiction of the United States District Court for the Southern District of New York.”
Focus on the Enforceability of the Pledge Agreement
PDVH is mistaken —the bondholders assert— when suggesting that pending summary judgment motions in the New York Court need to be resolved before the 2020 Bondholders can obtain injunctive relief.
They underline that the litigation in New York is a challenge initiated by the PDVSA Parties regarding the “enforceability of the Deed and the Pledge Agreement” and highlight that these agreements, as well as the rights of the 2020 Bondholders under them, “remain in effect today and will remain in effect unless the PDVSA Parties prevail” in such case.
It is noted that the PDVSA Parties “have already lost once in summary judgment” and that the Southern District of New York “dismissed in those previous proceedings some of the same arguments that the PDVSA Parties continue to present in their pending summary judgment motion.”
Interpretation of OFAC Sanctions
On the other hand, the 2020 Bondholders reject PDVH’s claim that OFAC sanctions prevent them from obtaining injunctive relief.
In this regard, they cite FAQ 808 from OFAC, which states that it “will not take enforcement actions against any person for taking measures to preserve the ability to enforce bondholders’ rights over CITGO shares that serve as collateral for the PDVSA 2020 bond at 8.5 percent.”
They note that if sanctions limited the enforcement of the collateral, once PDVH’s ownership is transferred to a successful bidder, “the sanctions will no longer apply, and the 2020 Bondholders will be able to direct immediate enforcement of the Collateral and take control of CITGO Holding.”
They remind that the pledge of 50.1% of CITGO Holding shares to the Trustee and Security Agent occurred in October 2016, “and, therefore, predates any relevant sanctions.” The shares have been in the Trustee and Security Agent’s possession since then. Therefore, any injunctive relief “will simply enforce the contractual rights of the 2020 Bondholders under the Pledge Agreement and will not effect a transfer of rights, which already occurred in 2016.”
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