The intricacies of the CITGO auction are evident from various angles, one of which involves the U.S. Second Circuit Court of Appeals. Petróleos de Venezuela S.A. (PDVSA) and its subsidiaries have filed a motion to expedite the process, asserting the legal invalidity of the PDVSA 2020 bonds issued by the previous administration. These bonds are backed by 50.1% of the shares of PDV Holding, which owns CITGO Holding Inc., and in turn, CITGO Petroleum Corporation.
The appellants argue that these bonds and the associated collateral agreement are completely void, as they were issued without the constitutionally required approval from Venezuela’s National Assembly. The urgency of their motion stems from the ongoing CITGO auction in Delaware, where the sale of PDVSA’s shares directly relies on the determination regarding these financial instruments.
PDVSA contends that approving the main bid in that auction, which presumes the validity of the notes, could unjustly divert over USD 2 billion to creditors with disputed claims and lead to the loss of CITGO Petroleum. Thus, the appellants request an expedited filing schedule that concludes by the end of January 2026, although the opposing party is against this request.
The Motion to Expedite Appeal
PDVSA’s parties—Petróleos de Venezuela S.A., PDVSA Petróleo S.A., and PDV Holding, Inc. (PDVH)—have submitted an urgent motion to the U.S. Second Circuit Court of Appeals to speed up their appeal against MUFG Union Bank N.A. and GLAS Americas LLC.
The core of the dispute is the validity of the “PDVSA 2020 Bonds,” issued in 2016 by Nicolás Maduro’s regime and secured by collateral on 50.1% of the shares of PDV Holding Inc. (PDVH), which owns CITGO Holding Inc., and hence CITGO Petroleum Corporation, Venezuela’s most significant foreign asset.
The urgency arises from the parallel CITGO auction occurring in Delaware in the context of the Crystallex International Corporation lawsuit against the Bolivarian Republic of Venezuela, which governs the sale of PDVH shares.
The current main bid, submitted by Amber Energy Inc., assumes the validity of these bonds and allocates USD 2.125 billion to bondholders to release the collateral. The appellants argue that if this bid is approved before the Second Circuit rules, it risks diverting more than USD 2 billion to creditors whose claims are disputed, instead of settling valid debts of Venezuela.
The Delaware court itself acknowledged that it would be a “fundamental injustice” if the sale is based on a claim later declared invalid. This motion seeks a swift resolution to prevent the loss of Venezuela’s strategic asset under terms deemed illegitimate and detrimental to Venezuela’s national interests and U.S. foreign policy.
The appeal originates from a decision by the U.S. District Court for the Southern District of New York, presided over by Judge Katherine P. Failla.
Central Argument of the Appeal
The disputed transaction: In 2016, Nicolás Maduro’s regime restructured a PDVSA debt and issued the PDVSA 2020 Bonds. To incentivize the exchange, collateral was offered on 50.1% of the shares of PDVH in CITGO Holding Inc., the parent company of CITGO Petroleum.
The invalidity argument by PDVSA’s parties: The appellants assert that the transaction is void because, under the Venezuelan Constitution, it required approval from the National Assembly (the country’s legislative body). Articles 150 and 187(9) of the Venezuelan Constitution demand National Assembly authorization for any “contract of national public interest” made with foreign entities that are not domiciled. In response to the proposal, the National Assembly passed resolutions in 2016:
– It reaffirmed that contracts of national public interest without its approval would be “null and void.”
– It specifically identified the exchange offer and “categorically rejected” the collateral on CITGO Holding shares.
District Court decision: Despite PDVSA’s parties’ arguments, the district court concluded on September 18, 2025, that the PDVSA 2020 Bonds are valid under Venezuelan law. This is the decision being appealed.
Litigation History and Support from the U.S. Government
The case has a complex history that spans several years and jurisdictions.
Initiation of the action (October 2019): Following the U.S. recognition of Juan Guaidó and the National Assembly as Venezuela’s legitimate government, the ad hoc board of PDVSA appointed by that government initiated this legal action to seek a declaration of the invalidity of the PDVSA 2020 Bonds.
First District Court ruling (October 2020): The court ruled in favor of the bondholders (appellees) and determined that New York law, rather than Venezuelan law, governed the bonds’ validity.
First appeal and referral (July 2024): The Second Circuit, after consulting the New York Court of Appeals, concluded that Venezuelan law should apply. Consequently, it overturned the district court’s decision and remanded the case for reconsideration under Venezuelan law.
Remand process: During this period:
The National Assembly of Venezuela filed an amicus curiae brief explaining why the bonds are invalid under Venezuelan law.
The U.S. government submitted a statement of interest reaffirming its recognition of the National Assembly as the legitimate government and urged the court to give its opinions on Venezuelan law the “same ‘respectful consideration’… that would be accorded to any foreign sovereign.”
Second District Court ruling (September 2025): The court ruled again in favor of the bondholders, this time concluding that the bonds were valid under Venezuelan law, leading to the current appeal.
Urgency: The CITGO Auction in Delaware
The primary reason for the acceleration request is the interconnection with the parallel litigation in the District of Delaware, Crystallex International Corporation vs. the Bolivarian Republic of Venezuela.
The PDVH shares auction: In this case, the CITGO auction is taking place through the sale of PDVSA’s shares in PDVH to satisfy debts owed to various creditors of Venezuela and PDVSA.
The Amber Energy Inc. bid: In October 2025, the case’s expert, Robert B. Pincus, recommended the approval of a bid from Amber Energy Inc. This offer is structured on the premise that the PDVSA 2020 Bonds and the associated collateral are valid.
– Payment to bondholders: Amber’s bid includes an agreement (TSA) that allocates USD 2.125 billion to the holders of the PDVSA 2020 Bonds in exchange for the release of the collateral on CITGO shares.
– Argumet from the appellants: PDVSA’s parties argue that this represents an “unjust windfall” for bondholders if their claims are eventually found invalid. They contend that these funds should be directed towards reducing PDVSA’s debt with legitimate creditors.
Strategic and Foreign Policy Implications
The motion highlights that the outcome of the case has significant implications for both Venezuela’s and the United States’ national interests.
Venezuelan strategic asset: CITGO Petroleum is one of the most important strategic assets of Venezuela. Its loss through a sale process based on disputed debt would be catastrophic.
Position of the U.S. State Department: A previous communication from the State Department to the court stated that the loss of CITGO by PDVSA “would be detrimental to U.S. policy” toward Venezuela and “hugely harmful and perhaps irretrievable” for both the Assembly-led government and U.S. foreign policy objectives.
Political consequences: Validating a transaction carried out by Maduro’s regime in “disregard of the Assembly’s explicit condemnation” would reward a regime that, according to the State Department, has “devastated the Venezuelan economy and exploited and squandered the assets of the Venezuelan people.”
Request for Accelerated Timeline
To mitigate the outlined risks, PDVSA’s parties propose an expedited filing schedule and request that oral arguments be scheduled promptly.
Procedural milestoneProposed deadlineAppellants’ opening briefDecember 8, 2025Appellees’ response briefJanuary 7, 2026Appellants’ reply briefJanuary 28, 2026
The appellants point out that this schedule would not harm the appellees, as the case has been litigated extensively for years, and all parties are familiar with the facts and arguments. They also note that the appellees oppose this motion to expedite the process.
Opposition from the Appellees
The appellees, MUFG Union Bank and GLAS Americas LLC, filed opposition to the motion to expedite the appeal presented by PDVSA.
The appellees argue that the case, arising from nearly a decade of litigation and touching on complex issues, should progress on the court’s standard schedule to ensure a thorough and thoughtful review process. They refute the appellants’ main argument, claiming urgency due to the CITGO auction occurring in a separate process in Delaware, pointing out that the sale decision is expected by the end of November, prior to the initiation of any accelerated briefing schedule.
Moreover, the appellees criticize the motion for placing an unfair burden upon them by requiring a response brief during the Christmas and New Year holidays. They conclude that the CITGO auction will proceed regardless of the appeal outcome and that there is no valid reason to expedite the process.
Order in Favor of PDVSA
The U.S. Second Circuit Court of Appeals issued an order granting a procedural motion in which PDVSA requested permission to file a deferred appendix. The court’s decision was affirmative and stated that the appendix may be submitted seven days after the appellants file their reply brief. A key point is that this motion was agreed upon by the appellees, indicating an agreement between the parties regarding this logistical aspect of the appeals process.