The only solution after trying many suggestions was to simply restart the "vz" service (definitely not preferable).
Even doing an ifdown and ifup for venet0 did not help.
ifup venet0
Bringing up interface venet0:
Configuring interface venet0:
net.ipv4.conf.venet0.send_redirects = 0
RTNETLINK answers: Network is down
Some errors from log:
CPT ERR: d2dc60........