By Marianna Parraga
In a recent development, a U.S. federal court officer overseeing an auction of shares in the parent company of Venezuela-owned refiner Citgo Petroleum has raised concerns about potential lawsuits that could disrupt the sales process. Three creditors – Gramercy Distressed Opportunity Fund, G&A Strategic, and Girard Street Investments – have filed separate lawsuits seeking to recoup billions of dollars from defaulted Venezuelan bonds, despite unlikely to receive auction proceeds.
The ongoing lawsuits have added complexity to the auction taking place in U.S. District Court, Delaware, with the aim of selecting a winner this month and finalizing the sale in November. The total claims registered with the Delaware court amount to $21.3 billion, while Citgo has been valued between $11 billion and $13 billion. The highest offer received in a previous bidding round was $7.3 billion, falling short of the claims.
As a result, some creditors have resorted to filing lawsuits in other courts, raising concerns among bidders about the potential risks associated with acquiring assets that could later be claimed by creditors. Court officer Robert Pincus has requested the judge to prevent further lawsuits that could undermine the ongoing sale process and disadvantage creditors who have followed the court’s procedures.
However, legal experts have pointed out the challenges in meeting Pincus’ request, as the Delaware court lacks jurisdiction over lawsuits in other states. The situation remains uncertain as the auction continues, with potential implications for the outcome of the sale and the interests of all parties involved.
Stay tuned for more updates on this developing story.
Analysis: The ongoing lawsuits surrounding the auction of Citgo Petroleum’s parent company could impact the sales process and the final outcome of the sale. If successful, the lawsuits could potentially disrupt the auction, affect the value of Citgo, and create uncertainties for bidders and creditors. It is essential for all parties involved to closely monitor the situation and be prepared for potential changes in the proceedings.
