On January 17, 2023, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued Venezuela-related General License (“GL”) 5J, amending FAQ 595.
GL
GL 5J (replacing GL 5I) further postpones the effective date of any transactions relating to, funding or otherwise relating to the Petroleos de Venezuela SA (“PdVSA”) 2020 8.5% Notes beyond April 20, 2023 To do. Prohibited by Executive Order (“EO”) 13835 (“Prohibition of Certain Additional Transactions Relating to Venezuela”). Amended by EO 13857 (“Taking Additional Measures to Address the National Emergency Concerning Venezuela”). GL 5I would have permitted such transactions after 20 January 2023. Delay is considered a protective measure to prevent seizure of his PdVSA assets by creditors.
Frequently Asked Questions
FAQ 595 – “What does Venezuela-related General License 5J authorize?In short, GL 5J further postpones trading of the Petroleos de Venezuela, SA 2020 8.5% Bond beyond April 20, 2023.
Subsection 1(a)(iii) of EO 13835 states that a U.S. person may be involved in a transaction involving the sale, transfer, transfer, or pledge of an equity interest in an entity owned by the Government of Venezuela (“GOV”). prohibited. % that’s all. One effect of subsection 1(a)(iii) is for a U.S. person to require approval before engaging in certain transactions involving interests in entities in which the government owns 50% or more of her . After the issuance of EO 13835, OFAC has determined that subsection 1(a)(iii) of EO 13835 will become a Petróleos de Venezuela, SA (“PdVSA”) 2020 8.5% Bond. OFAC issued GL 5 on July 19, 2018, removing his EO 13835 as an obstacle for holders of PdVSA 2020 8.5% Notes to access collateral. OFAC issued GL 5J on January 17, 2023. This further postpones the validity of the GL 5 authorization until 20 April 2023. The license to subsection 1(a)(iii) of EO 13835 as it applies to holders of the PdVSA 2020 8.5% Notes is not a valid authority. As a result, during that period, any transaction related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5% Notes is prohibited. otherwise Specially licensed by OFAC.
GL 5J will prevent bondholders from attempting to seize assets from CITGO to recover millions of dollars in outstanding debt. Whereas previous OFAC GLs issued 12-month extensions, GL 5J is only a 3-month extension, which could be a sign of a shift in US policy.
Conclusion
This white paper is intended as a guide only and does not replace specific legal or tax advice. For specific questions, please contact the author. We will continue to monitor the topics covered in this white paper and expect to provide future client updates where useful.
