Siemens Energy Inc Files Lawsuit Against Citgo’s Parent Company for $200 Million Default
Siemens Energy Inc has taken legal action against Citgo Petroleum’s parent company, PDV Holding, in a Texas court to recover approximately $200 million from a defaulted promissory note issued by Venezuela, as revealed in a court document.
Creditors involved in an auction of Citgo’s parent company shares in a Delaware court, aiming to settle debts and expropriations in Venezuela, have started seeking enforcement in other U.S. courts to prioritize their claims for when the auction proceeds are distributed.
The second round of bidding in the auction recently concluded with Elliott Investment Management’s affiliate emerging as the top bidder with a $7.3 billion offer. However, this amount may not cover the total $21 billion in creditor claims pending in court.
The dispute between PDVSA and Siemens stems from a transaction related to Dresser-Rand Company, now part of Siemens Energy, which was supposed to receive $166 million based on a promissory note.
Siemens Energy’s court filing stated, “SEI obtained a judgment against PDVSA from the Southern District of New York and now seeks to hold PDV Holding liable as PDVSA’s alter ego for the full amount of the judgment, which now exceeds $200 million.”
Gramercy Distressed Opportunity Fund and two affiliated entities have also filed similar lawsuits in Texas and New York, potentially disrupting the ongoing auction in Delaware, set to conclude soon. A court-appointed officer overseeing the auction has asked U.S. Judge Leonard Stark to prevent creditors from pursuing the same assets in other courts.
Analysis: Siemens Energy’s legal action against Citgo’s parent company highlights the complexities involved in resolving debt and expropriation issues related to Venezuela. The outcome of the auction in Delaware could impact the ability of creditors to recover their claims. The lawsuits filed by various parties in different U.S. courts add layers of legal challenges to the situation, potentially delaying the resolution process. Investors and stakeholders should closely monitor these developments as they could have significant implications for their financial interests.