Implications of the Third Circuit’s Crystallex Decision

Mark Weidemaier & Mitu Gulati On Wednesday, the Third Circuit granted Venezuela a victory in its ongoing settled-but-not-settled litigation with Crystallex. The case deals with a limited issue: Whether Delaware law imposes liability for the fraudulent transfer of an asset on an entity that is not itself a debtor.  We want to use this post to speculate a bit about the implications the decision may have for the bigger Venezuelan debt drama. If the new decision is important, it is because it signals something about the receptivity of US courts toward claims that Venezuela, PDVSA, and perhaps US entities like CITGO are “alter egos.” We disagree a bit about that question. But first, some background on this aspect of the Crystallex case. Crystallex holds a judgment against Venezuela for over $1 billion and has been looking for ways to collect. The case is in an odd limbo, in that there has been a settlement, which Venezuela does not appear to be paying.…

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