Venezuela continues to accumulate more lawsuits and payment judgments, with an endless list of cases, including one involving Italians Marco Cavara and Massimo Mazzaccone, who are suing Petróleos de Venezuela S.A. (PDVSA) in the U.S. District Court for the Southern District of New York for breach of contract.
The plaintiffs are demanding payment of principal and accumulated interest from bonds issued under New York law, which the entity stopped paying in 2017. The claim states that PDVSA has ignored its contractual obligations and previous payment requests, resulting in multiple breaches.
Like many others, the investors in New York court seek a ruling that grants them financial compensation for their losses.
The Lawsuit
On January 21, 2025, Marco Cavara and Massimo Mazzaccone filed a lawsuit against Petróleos de Venezuela S.A. (PDVSA) in the Southern District of New York based on the systematic non-payment of principal and interest for bonds issued by the Venezuelan state-owned company under New York law.
The plaintiffs, Italian citizens, are demanding the payment of principal and interest accumulated since 2017, following PDVSA’s cessation of payments. The action highlights PDVSA’s explicit waiver of sovereign immunity and its submission to New York jurisdiction in accordance with the bond issuance contracts.
The plaintiffs, residents of Italy, bought PDVSA bonds in 2017 for investment purposes, noting that PDVSA is described as an agency or instrumentality of a foreign state, given its majority ownership by the Bolivarian Republic of Venezuela. PDVSA Petróleo S.A. acts as a guarantor in the original issuance contracts.
The document states that under section 28 U.S.C. § 1330(a), the court has jurisdiction due to PDVSA’s status as a state entity, which unconditionally waived its sovereign immunity under Section 10.10(c) of the issuance contracts concerning actions related to securities. In these contracts, the defendant explicitly consented to submit to the jurisdiction of New York courts and to conduct its business regularly within that state.
Contractual Framework and Disputed Bonds
The debt arises from three specific issuance contracts, all governed by the laws of the state of New York:
ContractContract DateTrusteeFebruary 2011 ContractFebruary 17, 2011Wilmington Trust CompanyNovember 2011 ContractNovember 17, 2011Delaware Trust Company2013 ContractNovember 15, 2013Delaware Trust Company
PDVSA’s Breaches
The lawsuit indicates that PDVSA stopped fulfilling its obligations in November 2017. According to the terms of the contract, a default event occurs if PDVSA fails to pay principal or interest and such delay persists for a period of 30 days.
The first recorded interest payment default for the securities in question occurred between June and December 2017.
Since November 2017, there have been no additional payments of principal or interest.
Two series of bonds have already reached their maturity date—2021 and 2022—without any principal being refunded.
Plaintiffs’ Claims
Marco Cavara and Massimo Mazzaccone are seeking payment of the unpaid principal and accumulated interest.
Here is what Massimo Mazzaccone is claiming:
Security (ISIN)Interest RateMaturity DatePrincipal HeldUnpaid InterestUSP7807HAM7112.75 %February 17, 2022USD 40,000USD 40,800USP7807HAP039.00 %November 17, 2021USD 40,000USD 30,600SubtotalUSD 80,000USD 71,400
The total claimed by Mazzaccone is at least USD 151,400 plus additional interest.
Meanwhile, Marco Cavara demands:
Security (ISIN)Interest RateMaturity DatePrincipal HeldUnpaid InterestUSP7807HAR686.00 %November 15, 2026USD 1,900USD 969
The total claimed by Cavara is at least USD 2,869 plus additional interest.
The lawsuit contends that the bonds represent unconditional, valid, and binding obligations of PDVSA and asserts that the plaintiffs have complied with all contractual obligations, emphasizing that PDVSA failed to meet its timely payment responsibilities.
The non-payment by PDVSA occurred despite Marco Cavara and Massimo Mazzaccone sending a formal payment notification to PDVSA’s address in Caracas on April 21, 2023. The company did not make any disbursement.
Consequently, the plaintiffs are requesting a judgment that includes:
- Total payment of the principal owed.
- Payment of all overdue interests and those that accumulate until resolution.
- Reimbursement of legal fees and attorney’s expenses.