Venezuela is facing an increasing number of claims and payment orders, this time involving the holders of sovereign bonds known as the BL74 Bonds, through a class action led by Sabine Zahn.
In December 2024, Zahn filed this lawsuit against the Bolivarian Republic of Venezuela in the Southern District Court of New York for failing to pay the principal and interest due on the mentioned BL74 Bonds.
These bonds were issued under a Fiscal Agency Agreement from 1998 and are governed by New York law. The acceleration of the bonds’ maturity date occurred after Venezuela ceased making interest payments starting in January 2018. The lawsuit seeks class certification and a judgment compelling Venezuela to pay the unpaid principal and accrued interest.
The court has rescheduled the case and set a new timeline for the plaintiff’s class certification motion, which is set to begin in January 2026.
The Class Action
On December 5, 2024, a class action lawsuit for breach of contract was filed by Sabine Zahn — on her own behalf and on behalf of other bondholders — against the Bolivarian Republic of Venezuela in the United States District Court for the Southern District of New York.
They claim Venezuela’s failure to pay the principal and interest owed on their sovereign bonds with a 9.375% interest rate, which originally matured in 2034 (identified with ISIN US922646BL74).
The breach by Venezuela began with the missed interest payments in January 2018, which continued and became an “Event of Default” under the terms of the 1998 Fiscal Agency Agreement governing the bonds. As a result, holders representing over 25% of the outstanding principal of the bonds exercised an acceleration clause, declaring the total principal immediately due and payable. Venezuela has neither paid the accelerated principal nor the accrued interest since then.
The lawsuit seeks to certify a group of claimants (the “BL74 Class”), obtain a judgment for damages covering unpaid principal and interest, and recover associated legal costs. The court’s jurisdiction is based on an explicit waiver of sovereign immunity by Venezuela in the contract governing the bonds.
The plaintiff, Sabine Zahn, is a citizen and resident of Germany, holding a beneficial interest of USD 10,000 in the bonds in question. She acts on her own behalf and on behalf of all other bondholders in similar situations.
The Southern District Court of New York has jurisdiction over the case based on:
Waiver of Sovereign Immunity: In the Fiscal Agency Agreement of 1998, Venezuela explicitly and unconditionally waived its sovereign immunity for actions arising from the securities issued under that contract.
Consent to Jurisdiction: The Republic consented to submit to the jurisdiction of this court for actions initiated by security holders related to the contract or the bonds themselves.
Designated Agent: Venezuela appointed the Consul General of the Republic in New York as its authorized agent to receive legal process notifications.
Details of Debt Securities (BL74 Bonds)
The bonds in question, referred to as the “BL74 Bonds,” were issued under a Fiscal Agency Agreement of 1998 (1998 FAA), modified in 2004. This contract and the bonds are governed by the laws of the State of New York.
ISIN: US922646BL74
Capital Amount Issued: USD 1,000,000,000 (January 14, 2004) and USD 500,000,000 (December 10, 2004)
Interest Rate: 9.375% annual
Interest Payment Dates: Semi-annual: January 13 and July 13
Original Maturity: January 13, 2034
Accelerated Maturity: December 6, 2018
Governing Agreement: Fiscal Agency Agreement of 1998 (1998 FAA)
Chronology of Default
The default by Venezuela developed through a series of key events:
cessation of General Payments (November 2017): Venezuela stopped making required interest payments on its external debt.
First missed interest payment (January 13, 2018): Venezuela did not make the scheduled semi-annual interest payment for the BL74 Bonds on this date.
Event of Default: Under the terms of the bonds, the failure to pay interest for a period of 30 days constitutes an “Event of Default.”
Acceleration of Principal (December 6, 2018): Holders with more than 25% of the outstanding capital of the BL74 Bonds exercised their right under the “Acceleration Clause.” By a written demand to the fiscal agent, they declared that all unpaid principal and accrued interest on the bonds were immediately due and payable.
Default on principal payment: Venezuela did not pay the principal on the accelerated due date of December 6, 2018.
Continuing Defaults: Venezuela has missed all subsequent semi-annual interest payments since January 2018.
Missed Interest Payments on the BL74 Bonds
The lawsuit explicitly lists the following scheduled interest payment dates that were missed by Venezuela:
January 13, 2018
July 13, 2018
January 13 and July 13 of 2019, 2020, 2021, 2022, 2023, and 2024.
For Sabine Zahn, the current amount of unpaid interest on her holding of USD 10,000 amounts to USD 6,562.50.
Basis of the Class Action (BL74 Class)
The lawsuit seeks to be certified as a class action in accordance with the Federal Rules of Civil Procedure.
Class Definition: “All holders of the BL74 Bonds as of December 5, 2024, who continue to hold them thereafter.” It clarifies that “BL74 Bonds” refers to the beneficial interests of the investors.
Justification for Certification:
Numerosity: The class consists of thousands of investors, making individual accumulation by all members impractical.
Common Issues: There are factual and legal issues common to all members, such as determining whether a default has occurred and what the measure of damages is. These issues predominate over individual ones.
Typicality: The claims of plaintiff Sabine Zahn are typical of the class claims, as all bonds have the same terms and the damages arise from the same default.
Adequate Representation: It is argued that Zahn will protect the interests of the class fairly and adequately, having retained a competent attorney (Duane Morris LLP) experienced in class action and sovereign bond litigation.
Superiority: A class action is considered the superior and most efficient method for resolving this dispute.
Charge Filed
The lawsuit presents a single legal charge against Venezuela.
Charge I: Breach of Contract (BL74 Bonds) The plaintiff alleges that:
There is a valid, binding, and enforceable contract between the bondholders and the Republic, constituted by the BL74 Bonds and the 1998 FAA.
The plaintiff and class members have complied with their contractual obligations by purchasing the bonds.
The Republic breached its contractual obligations by failing to make timely payments of principal and interest.
As a direct result of this breach, the plaintiff and the class have suffered economic damages.
Reliefs Requested
The plaintiff requests the court to issue orders and a judgment against the Republic to:
Certify the BL74 Class, designating Sabine Zahn as representative and her attorney as class counsel.
Award damages to the plaintiff and class members to compensate them for Venezuela’s breach, in amounts to be determined by the court.
Award the plaintiff’s costs, including attorney’s fees, expert fees, interest, and other reasonable expenses.
Provide any other relief the court deems fair and appropriate.
Plaintiff Requests Extension
On July 31, 2025, Sabine Zahn, through the firm Duane Morris LLP, sent a communication to Judge John P. Cronan, requesting a deadline extension with the defendant’s consent.
She requested an extension for submitting any amended complaint and for the defendant to respond to the original complaint. The reasons for this second extension request include the summer vacation schedules of the plaintiff’s attorneys and clients, as well as the mutual interest of the parties in continuing discussions on the potential amendment of the filing. The court granted the request.
Court Establishes Procedural Timeline
On October 2, 2025, since neither party consents to trial at this time, they requested rescheduling for 2026, when discovery, reports, documentation production, and depositions must be completed by no later than May 16, 2026. The case will not be tried before a jury. The parties anticipate that the trial of this case will require 2 to 3 days.
On October 17, 2025, Magistrate Judge Henry J. Ricardo of the United States District Court for the Southern District of New York issued an order establishing the procedural timeline for the class certification motion in the Sabine Zahn vs. Bolivarian Republic of Venezuela litigation (Case 24-CV-9271).
The order was made from a joint proposal of the parties and sets forth a timeline extending from January to April 2026.
Milestone: Deadline
Filing the class certification motion by the Plaintiff: January 5, 2026
Filing the opposition brief by the Defendant: March 4, 2026
Filing the reply brief by the Plaintiff: April 3, 2026