A US appeals court has granted Venezuela a motion temporarily suspending rights won by six companies to participate in a court-organized auction to satisfy expropriation claims.
The companies had won conditional rights to take part in a federal proceeding in which the judge approved a share auction to satisfy a $970 million arbitration award won by the mining company Crystallex. The claims by the six companies total about $2.6 billion.
The appeals court temporarily suspended the rights until a panel hears arguments from lawyers representing Venezuela and the six companies in an appeal to be held in May-June.
Since March, six creditors – a unit of OI Glass, Huntington Ingalls Industries, ACL1 Investments, Koch Minerals and mining companies Rusoro Mining and Gold Reserve – have won conditional rights to go after the shares of one of the companies that owns Citgo Petroleum, the company refining company based in Houston, owned by Venezuela, to collect debts from expropriation cases.
The case originally brought by Crystallex in Delaware against Venezuela, which could lead to the breakdown of the seventh largest refining company in the United States, has shown great progress since the US Treasury Department gave the green light to the auction that the judge proposes.
“The motion suspends, under an emergency request, the rights that the six additional companies had won to be part of the auction until we file an appeal in the coming weeks,” said Horacio Medina, head of a Citgo Petroleum supervisory board.
In March, the board said it would appeal decisions giving additional firms the right to go after the shares of Citgo’s parent. The US Court of Appeals for the Third Circuit gave Venezuela until May 19 to file the appeal on Friday, bringing the final decision to be made in the third quarter, Medina said.
The freeze is separate from the progress of the Crystallex case, in which oil producer Conoco Phillips successfully sued seeking to satisfy an outstanding arbitration claim of about $1.3 billion.
Earlier this month, US officials told the court that the United States would not block an auction or any payment negotiations, paving the way for a possible embargo or forced sale of Venezuela’s most precious foreign asset. A Treasury license would still be needed to complete any sale.
“This is just a temporary lifeline for us,” Medina said, adding that talks about possible payment arrangements with various creditors have not broken off even amid court decisions.
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