Court pauses Crystallex pursuit of Citgo

: Crude oil, Oil products
19/12/12

A federal court today slowed efforts to sell shares of US independent refiner Citgo to satisfy Venezuelan debts.

Former Canadian mining firm Crystallex and US independent producer ConocoPhillips must wait for Venezuela to exhaust appeals with the US Supreme Court before continuing their pursuit of Citgo, the country's most valuable foreign asset, the US District Court for the District of Delaware decided today.

The court also ruled that at least two other plaintiffs must prove that Venezuela used its oil companies as an alter ego of the government, rather than relying on that finding from previous Crystallex litigation.

The decisions mark a reprieve for Venezuela's US-backed opposition government led by National Assembly leader Juan Guaido, who risks losing one of the only Venezuelan assets his shadow government controls. While the opposition government sought a longer stay and promised to restructure debts voluntarily, the court paused proceedings only long enough for the Supreme Court to review the matter.

"A stay any longer than the one the court is entering today is not, at this time, warranted," Judge Leonard Stark wrote.

The US Department of the Treasury repeated last week that a sale of Citgo shares could not proceed without executive branch approval. The Delaware court today solicited further guidance from the US Department of Justice.

Citgo and plaintiffs Crystallex, ConocoPhillips and OI European Group did not immediately return requests for comment.

Crystallex, controlled by US hedge fund Tenor Capital Management, argued yesterday that there was no reason for the court to delay the process of determining the value of Citgo shares in a sale. The company could not gather the details needed for Treasury to approve a sale process without continued litigation.

The court determined that moving forward could damage Citgo and Venezuelan national oil company PdV without ultimately producing a legal sale.

"Today's decision reflects the court's attempt to carefully balance the many competing interests in a dynamic and internationally sensitive set of circumstances," Stark wrote. "Should Crystallex believe the court's assessment is incorrect or an abuse of discretion, it can move to lift the stay — or seek to appeal this order."

Guaido appointed a parallel board controlling Citgo in February, which has cooperated with US bribery investigations and named new corporate officers.

Venezuelan president Nicolas Maduro continues to control PdV and Venezuelan institutions despite US sanctions aimed at crippling the country's oil sector.

More than a dozen companies, bondholders and other entities have filed in various US courts to seize Venezuelan assets in the US to satisfy more than $150bn in debts. Crystallex last year successfully persuaded the Delaware court that Venezuela used its oil companies as an alter ego of the state, and that Citgo was a fair target to satisfy debts.

The US Third Circuit Court of Appeals upheld that decision this year and rejected a Venezuelan request for a rehearing.

Today's decision was in part to stop "an influx of creditors to the court," Stark wrote.

By Elliott Blackburn

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24/11/08

Hungary’s Mol cuts forecast for 2024 refinery runs

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