Class Action Claims Bolivarian Republic of Venezuela Owes Outstanding Principal, Accrued Interest on Bonds

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A proposed class action lawsuit alleges the Bolivarian Republic of Venezuela has failed to pay the outstanding principal and accrued interest currently due and owing on bonds issued to United States residents.

The nine-page breach-of-contract lawsuit describes the plaintiff as one of thousands of individuals who hold bonds issued by the Bolivarian Republic of Venezuela pursuant to a Fiscal Agency Agreement (FAA) dated July 25, 2001, as amended in September 2003, March 2005 and December 2007. According to the complaint, the defendant was to pay proposed class members interest on the bonds semiannually at a fixed rate, as well as the outstanding principal in full on the bonds’ maturity date. 

“In breach of the FAA and bonds’ prospectus contract, Defendant failed to make principal, interest and/or other payments on the bonds to Plaintiff and Class members,” the lawsuit alleges. “As a direct and proximate result of Defendant’s actions, Plaintiff and Class members were caused to suffer and continue to suffer damages.” 

The lawsuit relays the plaintiff bought in May 2017 Venezuela Government International Bonds issued by the defendant with Deutsche Bank Trust Company Americas. Per the complaint, the plaintiff’s bonds, which the suit says matured on October 13, 2019, have a total par value of $180,000 and a coupon rate of 7.75 percent per annum. According to the lawsuit, the Bolivarian Republic of Venezuela was to pay the plaintiff interest on October 13 and April 13 of each year.

Per the suit, the plaintiff mailed around September 30, 2020 a notice of default and demand for payment to the defendant for the owed principal and accrued interest. Around October 8, the plaintiff mailed a second notice demanding payment, yet the defendant and Deutsche Bank Trust Company Americas have failed to respond, the lawsuit claims.

Law360 reported on September 30 that investment funds holding defaulted Venezuelan bonds were given the green light by a New York federal judge to move forward in pursuit of recovering the debt owed by the South American country. 

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