Paul Hastings LLP secured another victory in U.S. District Court for the Southern District of New York on behalf of the Ad Hoc Board of Venezuela’s state-owned oil company, Petróleos de Venezuela (PDVSA), in Syracuse Mountains Corporation v. Petróleos de Venezuela S.A. The court granted summary judgment for PDVSA, ruling that plaintiff Syracuse Mountains Corporation acquired its bonds in violation of New York’s ban of champerty, which prohibits an entity acquiring debt for the primary purpose of pursuing litigation.  Simultaneously, the court denied Syracuse Mountains’ motion for summary judgment, which sought a judgment in excess of $487 million.

The original shareholders in this case transferred the underlying bonds to Syracuse Mountains, consolidating their interests into a single entity to handle the litigation. Syracuse Mountains did not pay the shareholders for this transfer, instead issuing each shareholder equity in Syracuse Mountains in the exact pro-rata portion of its transferred bonds.

On August 1, 2024, U.S. District Judge Valerie Caproni found that Syracuse Mountains was indeed a shell company created for this purpose and in violation of the New York’s little-used champerty law, making the transfer invalid.  The court then ruled that PDVSA did not owe any money against those bonds, rendering a favorable ruling for our client PDVSA.

“We are pleased that the district court agreed with our position that the plaintiff acquired the notes at issue to commence this lawsuit,” said Kurt W. Hansson, Co-chair of the Complex Litigation and Arbitration practice. The court correctly recognized that New York’s law of champerty—though rarely invoked—bars this lawsuit.”  The victory was covered by Law360.

Kurt Hansson led the Paul Hastings team, which also included associates James L. Ferguson and Zach Melvin. 

About Paul Hastings

With widely recognized elite teams in finance, mergers & acquisitions, private equity, restructuring and special situations, litigation, employment, and real estate, Paul Hastings is a premier law firm providing intellectual capital and superior execution globally to the world’s leading investment banks, asset managers, and corporations.