As we noted in our last speech, one way to understand the limitation period is that it protects the financial officer, but does not change the rights of bondholders. (The idea here is that the Treasury doesn`t have to sit around forever until late bondholders collect their money.) But that is clearly not the purpose of this clause. This is because the bonds also contain the following clause, which protects the tax agent, leaving him out of incense when he returns the money to the government 2 years after receipt: the clause is strange. As Venezuela`s default on interest approaches the three-year maturity for certain bonds, some investors fear that if they do not file an appeal, claims to recover these missed payments will invalidate. To reassure her, the transitional government issued a statement saying it need not worry. According to the transitional government, “the clause deals with situations in which the budgetary representative holds sums paid by the Republic that are not used by bondholders or otherwise distributed to them.” The statement states that the limitation period has not begun because the financial officer has not yet received the funds. So, if the treasury is protected after two years, what does the statute of limitations do? The Maduro administration is proposing to reduce New York`s six-year statute of limitations. It is therefore not certain that the clause will apply, at least with respect to unpaid repayments. This is because the New York law may not impose an extension clause on the statute of limitations. But the shorter 3-year delay could reduce the statute of limitations, and that`s what worries investors. The transitional government`s statement should allay this concern, even if the statute of limitations means what the Maduro administration says. A final conundrum is that Venezuelan obligations seem to have different statutes of limitations.
As far as we can tell, the demarcation line is that most of the outstanding bonds were issued as part of a 2001 financial agency agreement. Previous bonds were issued under previous tax agreements, with slightly different provisions. June 25, 2018Claration of the Venezuelan Creditors Committee. . . . May 6, 2014 Market Practices for PDVSA Bonds 6% payable 15.11.26. January 28, 2019, 1819seence of a New Venezuela-Executive Order and General Licenses; Name linked to Venezuela. 19 April 2019 The UN government targets the “Three Stooges of Socialism” with new measures against Cuba, Venezuela and Nicaragua – Davis Polk Memorandum.
A few questions go a long way in my mind: a) Is local law really important? b) Could there be a basis for Venezuela to attempt to reduce the nominal requirements under this clause, codified by a major “organic” local law that investors know or should have known at the time of issuance? The Spanish text has no inconsistencies, but its literal translation sloppy with the words “whatever the… such a payment is due first… and the date on which the total amount was received in this way… (c) Is the fact that Maduro`s de facto Venezuela administration (not legally recognized in the United States) has raised the issue and seems to recognize the use of a recipe changing? Finally, at this stage, bondholders cannot affirm this controversial issue.