Grasping at Straws: Exploring PDVSA's Access to Debtor Relief Under Restructuring Regimes

Abstract

Petroleos de Venezuela, S.A. (PDVSA), the state-owned oil company of the Bolivarian Republic of Venezuela, is undergoing significant financial distress. As evidenced by the heavily discounted prices of its publicly traded bonds, there is speculation concerning PDVSA’s ability to service its debts. While public debate has focused on the probability and implications of a default, little has been written about PDVSA’s possible use of debtor relief in order to restructure its liabilities. Thus, this paper seeks to explore the forms of debtor relief PDVSA may seek to avail itself of, and whether PDVSA may be eligible of such relief under the pertinent restructuring regimes. After assessing PDVSA’s assets, operations, liabilities, and legal form, this paper explains that all strategies considered would be fraught with considerable legal and practical challenges. Even if not insurmountable, such obstacles could provoke highly contentious, litigious proceedings. The paper is meant to be accessible to readers who have neither specialized in international bankruptcy, nor in PDVSA’s bonds or current circumstances. Therefore, specialists in either field may find this Paper overly descriptive or covering familiar ground.