On July 19, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) confirmed through issuance of two new FAQs that Executive Order 13835 prohibits U.S. persons from attaching and executing judgments against equity collateral securing debt issued by Government of Venezuela state-owned entities, even if both the debt and the security interest pre-date sanctions.
Specifically, Subsection 1(a)(iii) of the Executive Order prohibits “[a]ll transactions related to, provision of financing for, and other dealings in…the sale, transfer, assignment, or pledging as collateral by the Government of Venezuela of any equity interest in any entity in which the Government of Venezuela has a 50 percent or greater ownership interest.” As we noted in a prior post, this prohibition is not limited to debt incurred or collateral pledged after the date of the Executive Order and so prevents executing on any collateral securing Government of Venezuela debt consisting of equity in state-owned or state-controlled entities absent a license from OFAC.
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