T&S Files $7.2 Million Sovereign Debt Lawsuit Against Venezuela
- Thompson & Skrabanek
- 4 days ago
- 3 min read
On July 8, 2026, Thompson & Skrabanek, PLLC filed a lawsuit in the United States District Court for the Southern District of New York against the Republic of Venezuela on behalf of the firm’s clients, Faisal AlFaour and Talal AlFaour.
The lawsuit seeks to recover more than $7.2 million in unpaid sovereign debt, interest, and related amounts arising from Venezuelan government bonds held by the firm’s clients. AlFaour et al. v. Bolivarian Republic of Venezuela, No. 1:26-cv-05769 (S.D.N.Y.).
The case arises from $2.7 million in face value of Venezuelan sovereign bonds identified as the “AT10 Bonds.” T&S's clients were original purchasers of the bonds and still hold them today. The bonds carry a 13.625% interest rate and matured on August 15, 2018. The Complaint alleges that Venezuela failed to repay the principal when due and has failed to make the required interest payments.
By June 30, 2026, the Complaint calculates the amount owed to T&S's clients at approximately $7.2 million, consisting of the $2.7 million principal balance, more than $3.25 million in contractual interest and coupons, and approximately $1.25 million in prejudgment interest. These amounts continue to accrue.
Venezuela's Broader Debt Crisis
The lawsuit comes amid one of the largest and most complicated sovereign debt crises in the world.
Venezuela has been in default on much of its international debt since 2017. As Reuters reported in January 2026, analysts estimated that approximately $60 billion of Venezuelan bonds were in default, while the country's overall external obligations, including PDVSA debt, bilateral loans, arbitration awards, accumulated interest and other claims, were estimated at roughly $150 billion to $170 billion.
Those numbers may be even larger. A subsequent Reuters analysis in July 2026 reported estimates of total Venezuelan debt ranging from approximately $150 billion to $200 billion, with some estimates reaching $240 billion. Reuters also reported that approximately $60 billion in government and PDVSA bonds remain outstanding in face amount, with past-due interest bringing total bondholder claims substantially higher.
Venezuela announced in May 2026 that it intended to pursue a comprehensive restructuring of its sovereign debt and the obligations of its state-owned oil company, PDVSA. But the number and variety of creditors, accumulated interest, U.S. sanctions, existing judgments, and competing claims to Venezuelan assets make any restructuring unusually complicated.
For individual bondholders, those developments do not necessarily eliminate their contractual rights. Instead, they highlight an important feature of sovereign debt disputes: creditors may need to establish and preserve their claims while a much broader restructuring and collection process unfolds.
The New York Connection
Although the defendant is a foreign nation, the lawsuit has several important connections to New York.
The AT10 Bonds were issued pursuant to a Fiscal Agency Agreement governed by New York law. More importantly, under the terms of the bonds, Venezuela expressly and unconditionally waived sovereign immunity for actions brought by holders of the securities and consented to jurisdiction in the Southern District of New York.
Those provisions are particularly significant because lawsuits against foreign countries ordinarily implicate the federal Foreign Sovereign Immunities Act. Here, however, Venezuela agreed in advance that bondholders could pursue such claims in New York federal court.
The firm’s clients were also members of an existing certified class of AT10 bondholders, but they timely opted out of that proceeding to pursue their claims against Venezuela individually.
The lawsuit asserts a claim for breach of contract and seeks recovery of all unpaid principal and interest, together with additional amounts continuing to accrue.
Thompson & Skrabanek looks forward to prosecuting the claims and pursuing recovery on behalf of its clients.
The Firm continues to grow its international and sovereign disputes practice. If you need help with an international dispute involving a foreign government with a basis in New York, please contact us today.
A copy of the Complaint is available for download below.
Comments