In the CITGO auction process, laid-off workers from PDVSA are seeking explanations from judicial expert Robert Pincus regarding how the rights of these dismissed workers will be addressed during the sale.
United under the Non-Governmental Organization Petroamigos de Venezuela, the 23,000 workers from Petróleos de Venezuela S.A. (PDVSA) who were irregularly dismissed from the industry between 2002 and 2003 by the late former president, Hugo Chávez, are represented by lawyer Leroy Garrett—one of the dismissed. They are pursuing compensation and, in this regard, submitted a motion to the court, which was admitted in April 2024.
This motion—which does not demand—seeks restitution for a specific group of professionals and does not require consent from all affected parties, as it is a claim—not directed at CITGO, which was not the employer of these workers—due to their rights being affected by their illegal termination from the Venezuelan oil company.
Questions Regarding the Role of PDVSA Workers
The request before the Delaware Court, where the case Crystallex International Corporation vs. the Bolivarian Republic of Venezuela is ongoing, has led to the auction of CITGO Petroleum Corporation, whose shares are owned by PDV Holding, a subsidiary of PDVSA. It raises crucial questions for Robert Pincus regarding the refinery’s sale process.
Garrett addresses Pincus about concerns regarding the rights of former oil and mining workers from Venezuela, the ownership and validity of current shareholders’ titles, and how the special expert plans to remedy the lack of representation for the transferors of shares.
The workers are asking about the distribution of profits to the victims and whether fair compensation for former PDVSA victims has been considered. Petroamigos emphasizes if there is any proposal for reserving funds to cover the damages of the workers, and what the methodology for the sale distribution would be like.
A Legitimate Claim
Petroamigos de Venezuela asks Robert Pincus questions about their rights
The former PDVSA workers grouped in Petroamigos de Venezuela base their demands on the legal principle of Uti Possidetis Iuris, thus questioning the legal basis and legitimate representation of Venezuelan officials in the sale process of oil and mineral rights, which under this principle belong to the Venezuelan people.
The second concern from Petroamigos pertains to the distribution of the sales revenue, given there is a central concern regarding whether the proceeds from the sale of PDVSA’s assets will address the claims of various interested parties, including former PDVSA employees or Alter Ego victims in general, regarding pensions, benefits, or damages.
They inquire about how the special expert will consider humanitarian claims from the tribunal perspective, asking for information on the demands of former PDVSA employees from an equity and humanitarian viewpoint.
For the former oil workers, it is crucial to know if a reserve fund from the sales revenue is contemplated for the benefit of the former owners—meaning the workers—to cover claims from those adversely affected humanitarianly.
Furthermore, the former workers want to know if the special expert has established a timeline for addressing parallel litigation that could impact the sale process.
Petroamigos questions the assignment methodology for the sale distribution, specifically whether it will be based on a “first come, first served” or equitable distribution approach.
Given the strategic and financial importance of the CITGO auction, the inquiry raises several points:
First, they ask if the special expert, based on CITGO’s financial strength to meet creditor obligations even if not sold, would consider proposing an agreement to the court that allows the Department of Justice to mitigate potential legitimacy issues for shareholders and avoid operational or supply issues, recognizing the company as an energy center and national security facilitator.
Second, they want to know if it would be considered to persuade the court to allow workers to file claims without immediate judgments, or that bankruptcy courts accept unsecured claims.
Lastly, based on CITGO’s capacity to honor its obligations, would it be reasonable, to prevent foreseeable harm, to undergo procedures under the automatic stay prescribed by section 11 of the United States Code, article 362?
The Questions
The oil and mineral rights in general (Uti possidetis iuris) belong to the Venezuelan people. The ownership of these resources is represented by an authorized agent exercising legitimate authority before government officials. Regarding the title to properties or the valid status of tenant shareholders, known in these procedures as the parties from Venezuela, the main question is how the Judicial Expert will rectify the risk of lack of representation of the property transferors once the sale process designates a winner.
Will the proceeds from the sales cover PDVSA’s obligations to its former employees or to the victims of Alter Ego, including pensions, benefits, or damages?
Has the Special Magistrate considered providing former PDVSA victims with equitable treatment due to the humanitarian nature of their claims?
Would the Special Magistrate consider proposing to the court, for the benefit of future ownership, to reserve funds for compensation to the workers given their humanitarian impact?
Has the Special Magistrate defined a timeline for resolving parallel claims that might affect the sale’s proceeds?
What methodology would be used for the sale assignment, whether on a “first-come, first-served” basis or equitable distribution?
Based on CITGO’s financial ability to meet creditor obligations without a sale, has the Special Magistrate considered proposing to the court an agreement under the Department of Justice? The rationale for this option is to proactively mitigate any potential legitimacy issues of shareholders and avoid operational or supply disruptions at the company, as it serves as an energy center and national security facilitator.
Would the Special Magistrate consider persuading the court to allow workers to file claims without immediate judgments, similar to how bankruptcy courts accept unsecured claims?
Taking into account CITGO’s ability to meet its obligations, would it be reasonable, to avoid any foreseeable risks, to conduct proceedings under the automatic stay prescribed by Title 11 of the United States Code, Section 362?