Citgo, the Houston refiner that is Venezuela's most valuable asset abroad, has been the prize in a decade of litigation, and one of the largest open questions in that fight was answered on Tuesday. A three-judge panel of the Second Circuit held that PDVSA's exchange offer did not require National Assembly approval under Article 150 of the Venezuelan Constitution and that the act-of-state doctrine does not bar enforcement of the notes or the collateral pledge, the court's opinion said, a result that lets bondholders pursue proceeds from any sale of Citgo's parent, according to Bloomberg. Because the refiner is owned through a Delaware company, the contest has played out in US courts. Secured bondholders sit ahead of a long queue of claimants who won judgments over Chávez-era expropriations and sovereign defaults.
The notes were born of distress. Oil prices had collapsed, PDVSA's ratings had slid, and heavy principal payments loomed in 2017. The company offered a swap into notes maturing in 2020, secured by a 50.1% stake in CITGO Holding; about 39% of holders accepted, and PDVSA defaulted in October 2019, according to the opinion. The opposition-controlled National Assembly had rejected the pledge almost as soon as it was announced. After Washington recognized Juan Guaidó as interim president in 2019, a new PDVSA board sued in Manhattan to void the deal. New York's highest court was asked which law governed and answered that Venezuela's did, sending the case back for the decision now affirmed.
The ruling lands in the middle of a separate auction in Delaware. A judge there named Amber Energy, an affiliate of Elliott Investment Management, the winning bidder in November 2025, and its offer includes a $2.0 billion settlement for the bondholders, though rivals argued the holders should not be paid before their notes were confirmed valid, Bloomberg Línea reported. That sale faces its own appeal in the Third Circuit. PDVSA may still seek rehearing by the full court or review by the Supreme Court, and no transfer can close without a Treasury sanctions license.