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Venezuela as a Case Study in Limited (Sovereign) Liability

Forthcoming, Capital Markets Law Journal

UNC Legal Studies Research Paper No. 2882835

10 Pages Posted: 13 Dec 2016 Last revised: 23 Jan 2017

Mark C. Weidemaier

University of North Carolina School of Law

Matthew Gauthier

University of North Carolina at Chapel Hill, School of Law, Students

Date Written: December 8, 2016

Abstract

Venezuela is in a severe economic crisis. An October 2016 debt swap bought some time for the beleaguered state-owned oil company Petróleos de Venezuela, S.A. (PDVSA), but there remains speculation about default by both PDVSA and the government. The fact that Venezuela’s economy is heavily dependent on oil exports has led some observers to assume that, in the wake of a default, creditors could easily seize assets associated with natural resource exploitation. In this article, we explore some of the legal considerations that would govern such litigation. Our primary claim is that matters are not so simple. Even ignoring issues associated with sovereign immunity and bankruptcy law, we emphasize the doctrine of separate corporate personhood (i.e., the fiction that corporations are independent legal persons responsible for their own, and only their own, debts). We do not purport to predict the outcome of any disputes that might arise in the wake of a default. Instead, we use Venezuela as a case study, identifying the many ways in which the doctrine of separate corporate personhood may affect the relative rights and bargaining power of a sovereign debtor and its creditors.

Keywords: sovereign debt, veil piercing, Venezuela

Suggested Citation

Weidemaier, Mark C. and Gauthier, Matthew, Venezuela as a Case Study in Limited (Sovereign) Liability (December 8, 2016). Forthcoming, Capital Markets Law Journal; UNC Legal Studies Research Paper No. 2882835. Available at SSRN: https://ssrn.com/abstract=2882835

Mark Weidemaier (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919.843.4373 (Phone)

Matthew Gauthier

University of North Carolina at Chapel Hill, School of Law, Students ( email )

Chapel Hill, NC
United States

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