Venezuela's state-owned oil company plans to appeal a New York federal judge's recent decision ordering it to pay $2.86 billion to bondholders, after the judge ruled last month that defaulted Venezuelan bonds were validly issued under the South American country's laws.

Petróleos de Venezuela SA, known as PDVSA, was joined in its Friday notice of appeal by its subsidiary PDVSA Petróleo SA and PDV Holding Inc., another PDVSA subsidiary that wholly owns Citgo Holding Inc., the parent company of Citgo Petroleum Corp.

The one-paragraph notice said the PDVSA co-plaintiffs are appealing to the Second Circuit against U.S. District Judge Katherine Polk Failla's Oct. 17 order to pay $2.86 billion to bondholders, as well as the judge's Sept. 18 order denying the Venezuelan oil company's bid to refuse enforcement of the bonds.

Judge Failla's more recent order also entered a final judgment dismissing, with prejudice, the state-owned oil firm's lawsuit against MUFG Union Bank NA, as trustee for the bonds, and GLAS Americas LLC, as collateral agent.

PDVSA sued Union Bank and GLAS Americas in 2019, seeking a court declaration that certain notes issued following a bond swap transaction were invalid and illegal, and thus unenforceable. In 2020, the district court relied on New York state law to determine the bonds' validity and granted summary judgment in favor of the bank and GLAS.

New York's highest court found in early 2024 that Venezuelan law, not New York law, governed the bonds' validity. The Second Circuit remanded the case to the district court in July 2024 to determine whether the bonds were still valid under Venezuelan law.

Venezuela argued in the case earlier this year that the bonds issued by Venezuelan President Nicolás Maduro's administration are illegal because they pledged a 50.1% stake in Houston-based Citgo Petroleum's parent, Citgo Holding, as collateral. Citgo Holding is owned by PDV Holding and is Citgo Petroleum's only shareholder.

The Venezuelan National Assembly claims that Maduro, who has been serving as the president of Venezuela since 2013, improperly failed to obtain its permission before potentially exposing Citgo to creditors.

PDVSA, which is now under the control of an ad hoc administrative board appointed by former Venezuelan National Assembly president and opposition leader Juan Guaidó, filed the current litigation in the Southern District of New York in 2019 in a bid to preserve Citgo, a day after PDVSA defaulted on the bonds.

On Thursday, Union Bank, GLAS and PDVSA told Judge Failla in a letter that they agreed the court should enter a partial final judgment that dismisses PDVSA's complaint, while granting summary judgment on seven counterclaims Union Bank and GLAS had lodged and reserving judgment on four others.

In the Friday judgment, Judge Failla said PDVSA and PDVSA Pétroleo are jointly responsible for the $2.86 billion. She also said they must pay more than $609,000 in interest each day after Friday, with that amount changing at later dates.

Counsel for the parties did not immediately respond Monday to requests for comment.

The bondholders are represented in the litigation by a trustee, MUFG Union Bank NA, and collateral agent GLAS Americas LLC.

MUFG Union Bank and GLAS Americas are represented by Jeff Recher, Paul Patterson, Roberto Gonzalez and Andrew Rosenberg of Paul Weiss Rifkind Wharton & Garrison LLP and by Chris Clark, Virginia Tent, Brian Burns and Andrew Rodgers of Clark Smith Villazor LLP.

Petróleos de Venezuela SA and its subsidiary, PDVSA Petróleo SA, are represented by Kurt W. Hansson, James L. Ferguson, Zachary D. Melvin and Igor V. Timofeyev of Paul Hastings LLP.

PDVSA subsidiary PDV Holding Inc. is represented by Michael Gottlieb, Kristin Bender, Nicholas Reddick and Alyxandra Vernon of Willkie Farr & Gallagher LLP.

Venezuela is represented by Donald B. Verrilli Jr., Elaine J. Goldenberg, Ginger D. Anders, George M. Garvey and Adeel Mohammadi of Munger Tolles & Olson LLP.

The case is Petróleos de Venezuela SA et al. v. MUFG Union Bank NA et al., case number 1:19-cv-10023, in the U.S. District Court for the Southern District of New York.