Contrarian Capital Management, LLC v. Bolivarian Republic of Venezuela

Background

The plaintiffs sued Venezuela in 2019 for failing to make payments on bonds issued by Venezuela. The court entered a final judgment for the plaintiffs on October 16, 2020. Venezuela made no payments on that judgment, and in July 2021 the court found under 28 U.S.C. § 1610(c) that a reasonable period had passed for enforcement.

In December 2023, the parties agreed to another judgment for more than $200 million based on additional missed bond payments. The court entered that judgment on January 2, 2024. Venezuela again made no payments. The plaintiffs moved for an order finding that a reasonable period had passed since the January 2024 Judgment and allowing them to enforce it. Venezuela opposed the motion.

Legal standard

Under the Foreign Sovereign Immunities Act, property in the United States belonging to an agency or instrumentality of a foreign state cannot be attached until the court determines that a reasonable period has passed after judgment and any required notice. The statute does not define “reasonable time.” Courts may consider steps needed to arrange payment, representations by the foreign state about paying, actual payment efforts, and evidence that the state may move assets to avoid enforcement.

Analysis

Judge Torres held that eleven months was a reasonable period under § 1610(c). The court noted that other courts had found shorter periods reasonable, including seven months, three months, and two months. The court also relied on its earlier decision in a related case, where it found that seven months was reasonable.

Venezuela argued that attachment should not be allowed because it had cooperated by entering into the stipulation and did not plan to frustrate the judgment. The court concluded that those points did not change the fact that Venezuela had taken no steps to satisfy the January 2024 Judgment for eleven months. The court also denied Venezuela’s request to delay the plaintiffs’ motion pending the restitution of democracy in Venezuela and the start of a debt-restructuring process.

Disposition

The court GRANTED the plaintiffs’ motion for an order under 28 U.S.C. § 1610(c) finding that a reasonable period had passed since entry of the January 2024 Judgment. The court directed the Clerk of Court to terminate the motion at ECF No. 181. The court separately DENIED Venezuela’s request to deny the motion pending political and debt-restructuring developments.