Venezuela moves to overturn Citgo sale order

Venezuela, its state oil company PDVSA and related entities have asked the US Court of Appeals for the Third Circuit to set aside a Delaware judge’s order approving the sale of PDV Holding, the parent of Citgo Petroleum, the ad hoc board of PDVSA said.

In a filing on January 8, the parties argued that the auction process was undermined by conflicts of interest, mistakes in law and procedural rules that they say advantaged certain bidders and reduced the value of the asset, El Nacional reported. 

The appeal asserts that advisers to the court-appointed Special Master – Weil, Gotshal & Manges LLP and Evercore Group LLC – had ongoing economic ties to the chosen bidder, Elliott Investment Management’s Amber Energy affiliate, and to holders of PDVSA’s disputed 2020 bonds.

“Those responsible for recommending a buyer to the judge ended up recommending their own client, in an offer at least $2bn lower than the highest bidder’s,” the brief said, adding that choosing a lower bid ignored the highest-bidder principle and produced a result that “shocks the conscience.”

The appeal argues the financial links created an “unequivocal appearance of bias” that should have led to the advisers’ removal under US federal law.

It also states these relationships influenced recommendations on the sale’s final structure and choice of bidder, including weighing the favoured bidder’s settlement potential with PDVSA 2020 bondholders whose claims are still under appeal in another federal court.

The ad hoc board said the sale as approved by the Delaware District Court “unjustifiably reduces the value of Citgo by billions of dollars and legitimises a procedure that departs from the most basic standards of impartiality and due process.”

It said it will continue to defend the company’s assets and update on the case’s progress.