Two Cayman-registered funds are suing the Bolivarian Republic of Venezuela, claiming that the struggling South American regime owes them some US$26 million in unpaid debt.

The Cayman entities are the Pharo Gaia Fund Ltd. and Pharo Macro Fund Ltd., which are controlled by Pharo Management LLC in New York, where the lawsuit is taking place.

According to the funds’ claim, Pharo Macro owns a beneficial interest in US$1,500,000 of 13.625-percent bonds Venezuela issued in 2002.

Those bonds matured last August, at which time their principal amount became due and payable, the lawsuit states. Because Venezuela has not redeemed the bonds upon maturity, they continue to accrue interest, according to the lawsuit, which is posted on the financial services site OffshoreAlert.

Pharo Gaia also allegedly owns a beneficial interest in US$114,000,000 of 7.75-percent bonds Veneuzela issued in 2009. Pharo Macro stated that it owns US$95,500,000 of the same type of bonds.

Those bonds mature this October, but the Venezuelan government has allegedly missed making interest payments starting in October 2017.

As a result of the alleged defaults, Pharo Macro is claiming that Venezuela owes it US$1,704,375, excluding accrued and prejudgment interest, for the 13.625-percent bonds.

The fund is also claiming that Venezuela owes it US$11,101,875 for defaults on the 7.75-percent bonds. Likewise, Pharo Gaia claims that the communist regime owes it US$13,252,500 for the defaults on the bonds.

Venezuela has been in an economic crisis since at least 2010, with the country experiencing hyperinflation and shortages in food, medicine, and basic supplies like toilet paper and soap. More than two million people have reportedly fled the country since 2014.

According to a Canadian Broadcasting Corporation report, the country’s government has about US$150 billion in outstanding public debt. Debt holders include a number of U.S. financial institutions, as well as Russia and China.

U.S. courts have reportedly allowed investors to seize Venezuelan oil shipments and other assets in order to satisfy the debts owed by the country’s government.

“In August, a judge in the U.S. state of Delaware authorized the seizure of assets owned by Citgo, an affiliate of Venezuela’s state oil company, to satisfy debts owed by Venezuela to Canadian mining company Crystallex,” the CBC reported in September, adding, “In May, ConocoPhillips, a U.S. oil producer whose assets were expropriated by Venezuela’s government in 2007, won an international arbitration action against Venezuela’s state oil company, PDVSA.

“This allowed Conoco to start seizing Venezuelan oil in Curacao and other Dutch Caribbean islands in a bid to recoup US$2 billion.”

In addition, China has reportedly been receiving interest payments from Venezuela in the form of oil.

“This arrangement didn’t stop at least one major Chinese oil company, Sinopec, from launching a lawsuit against Venezuela’s PDVSA in a U.S. court last December for not fulfilling a contract. (It has since been settled),” CBC reported.