Sanctions Primer: How OFAC Shapes the Restructuring

U.S. sanctions on Venezuela, administered by the Treasury Department's Office of Foreign Assets Control (OFAC), create binding constraints on any restructuring process.

Key Executive Orders

E.O. 13808 (2017): Prohibits transactions related to new Venezuelan debt

E.O. 13850 (2018): Blocks property of the Government of Venezuela

E.O. 13884 (2019): Comprehensive sanctions on Venezuelan government

What's Blocked

Without authorization, US persons cannot:

Engage in transactions with the Government of Venezuela

Deal in new Venezuelan debt or equity

Provide financing to PDVSA

Process transactions involving blocked persons or entities

General Licenses

OFAC has issued general licenses that authorize certain activities:

GL44/GL44A: Oil sector transactions (currently limited)

GL41: Chevron-specific operations authorization

GL8M: Humanitarian transactions

GL5O: Certain legal and administrative activities

Secondary Sanctions

Non-US persons face risk of secondary sanctions if they:

Materially assist blocked Venezuelan entities

Engage in significant transactions with PDVSA

Support Venezuelan government revenue generation

This has limited participation by European and Asian creditors in some activities.

Implications for Restructuring

Any comprehensive restructuring would require:

1. Specific OFAC license authorizing the transaction

2. Coordination with State Department on political recognition

3. Clearance of secondary sanctions concerns for non-US participants

Wind-Down Mechanics

Current wind-down provisions under GL44A extend through specific dates. Companies must complete previously authorized transactions, not enter new business arrangements, and maintain compliance documentation.

Post-Maduro Outlook

The political transition may enable comprehensive sanctions relief for recognized government, expanded general licenses for oil investment, and simplified transaction authorization.

Treasury has not yet issued guidance on the post-transition sanctions posture. Watch for statements from OFAC and the State Department's Office of Economic Sanctions Policy and Implementation.