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April 03, 2017

EIG Energy Funds XIV and XV’s Suit Against Petroleo Brasileiro S.A. Allowed to Move Forward in US Federal Court

On April 3, 2017, the U.S. District Court for the District of Columbia ruled in favor of Kramer Levin client EIG Energy Funds XIV and XV, allowing their suit against Petróleo Brasileiro S.A. (Petrobras), the state-owned Brazilian oil company, to move forward in the U.S. federal courts, rather than in Brazil. In the suit, which stems from the Brazilian “Car Wash” scandal, the Funds claim that Petrobras defrauded them and caused them to lose over $221 million. The EIG Funds invested in a company called Sete, a company formed by Petrobras to develop a fleet of drilling ships for oil operations in the Pre-Salt Reserves off the coast of Brazil. When Brazilian prosecutors disclosed that Petrobras and Sete procured millions of dollars in bribes from the drill ship builders, Sete’s senior lenders refused to provide financing that was critical to the success of the project and Sete went bankrupt, resulting in a total loss of the Funds’ investment.

The ruling was reported on by Law360.

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