Creditors, investors appeal dismissal of suit against Citigroup claiming $1.1 billion in losses

By Karen Kidd | Jun 28, 2018

MIAMI (Florida Record) – A group of investors and creditors who claim they lost $1.1 billion in a bankrupt Mexican oil services firm are appealing their racketeering and corruption lawsuit against Citigroup Inc. after a federal judge in the U.S. District Court for the Southern District of Florida, Miami Division, dismissed the case earlier this month.

MIAMI (Florida Record) –  A group of investors and creditors who claim they lost $1.1 billion in a bankrupt Mexican oil services firm are appealing their racketeering and corruption lawsuit against Citigroup Inc. after a federal judge in the U.S. District Court for the Southern District of Florida, Miami Division, dismissed the case earlier this month.

The investors and creditors, including the lawsuit's named plaintiff, Louisiana-based shipping company Otto Candies, filed notice June 22 that they will appeal the June 15 decision by U.S. District Judge Darrin P. Gayles to the 11th U.S. Circuit Court of Appeals in Atlanta.

Citigroup has been pushing to have the case heard in Mexico.

"Plaintiffs are a diverse group of entities including shipping companies, investment funds and a bank, located all over the world including in the United States, Mexico, the Caribbean, South America, Europe, and the Middle East," Gayles said in his 15-page amended order issued June 15, dismissing the case.

"Plaintiffs bring this action as vendors, creditors, and bondholders of Oceanografía S.A. de C.V. (OSA), a now bankrupt Mexican oil and gas services company. Petroleos Mexicanos S.A. de C.V. is Mexico’s state-owned oil and gas company and, at one time, one of the largest customers of OSA's offshore drilling services," Gayles ruling said.

Plaintiffs filed suit against Citigroup in February 2016 claiming they were defrauded as part of a loan scheme that lead to OSA's collapse in 2014.

During a hearing in November, Citigroup asked Gayles to dismiss the case, saying "Mexico is the more appropriate forum" and, alternatively, that plaintiffs in the case had failed to state a claim as required under federal rules of civil procedure. "Defendant argues that based on its stipulation to submit to jurisdiction and waive statute of limitations defenses, plaintiffs can easily reinstate this action in Mexico without undue inconvenience or prejudice," Gayles said in his order. "As plaintiffs do not contest defendant's representation, the court finds defendant's stipulations sufficient to establish that plaintiffs can reinstate their case in Mexico without undue burden."

Gayle's dismissal was conditional on Citigroup consenting to jurisdiction of Mexican courts, that they waive all applicable statute of limitations defenses that could be attributed to filing the case in Mexico and agree to "the enforcement of any final Mexican judgment against it as to its assets in Mexico or the United States."

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