A U.S. appeals court said Venezuela’s stake in U.S.-based oil refiner Citgo Petroleum Corp. could be seized to satisfy a judgment against the country, dealing a blow to its U.S.-backed opposition government, Wall Street Journal reported.
The U.S. Court of Appeals for the Third Circuit on Monday sided with Crystallex International Corp., a defunct Canadian gold miner that has laid claim to Citgo’s valuable Gulf Coast crude refineries to collect on a $1.4 billion debt.
The ruling further clouds the future of Citgo, which has considered filing for bankruptcy to sort out competing claims from creditors. As Venezuela’s largest seizable asset in the U.S., Citgo is an obvious source of compensation for bondholders and multinational companies that are owed billions of dollars and haven’t been paid during the country’s lengthy economic meltdown, the Journal adds.
Of all the claimants circling Citgo, Crystallex was the first to fight its way to the company’s front door, winning permission from a Delaware federal judge last year to seize shares in Citgo’s U.S. parent company.
Crystallex, which partnered with Venezuela on a gold-mining venture that soured in 2011, has said it wants to put those shares up for sale, potentially wresting control of Venezuela’s largest known external asset. Any sale would require approval from the U.S. Treasury Department, according to Monday’s decision.
Led by self-proclaimed president Juan Guaido, Venezuela’s opposition government took effective control of Citgo in February from the ruling leftist regime and had urged U.S. courts to protect the company from creditors. The opposition’s lawyers can ask the Third Circuit to rehear the case. If they lose, they can then appeal to the U.S. Supreme Court.
But if Monday’s ruling stands, the Trump administration may have to choose between curtailing creditors’ collateral rights or allowing Citgo to slip from the opposition’s grasp.
A Crystallex spokesman said it reached out in recent months to the opposition, hoping to negotiate “a fair settlement that would compensate Crystallex for its property and preserve the value of Citgo for the Venezuelan people.”
Representatives for the opposition didn’t respond to requests for comment. Citgo also didn’t respond.
Citgo remains a flashpoint in the political struggle gripping Caracas, where President Nicolas Maduro has kept his hold on key state institutions and the military despite food shortages, rampant hyperinflation and international criticism over human-rights abuses.