A US federal judge has delayed the deadline for bidding on shares in Citgo Petroleum, a former subsidiary of Venezuela’s state-owned oil business, by almost two weeks.
According to a court filing made Tuesday, the new cut-off date for competing bids has been moved at least until June 2. The decision comes as legal battles mount and could change how creditors are paid in the matter.
A Delaware court oversaw a court-ordered auction to settle claims with 15 creditors about unpaid debts and nationalisations in Venezuela.
Those emerging details are being closely scrutinised, however, given the impact that the process will have on one of the largest US-based assets associated with the South American country beset by economic turmoil.
Red Tree’s $3.7 billion offer sets the floor
In April, Delaware District Judge Leonard Stark allowed a $3.7 billion stalking-horse bid made by Red Tree Investments, an arm of Contrarian Funds. This bid determines the minimum price that other parties must exceed to win the auction.
Previously, prospective bidders were required to submit proposals by May 28.
However, Venezuela’s legal officials asked for an extension, citing the need for more time to consider the potential repercussions of other court matters presently pending in the United States.
These concurrent cases may influence the valuation or terms of the Citgo parent’s sale, raising concerns among stakeholders.
Legal developments prompt a shift in the timeline
The extension request was characterised as a required response to a “monumental development” in the legal environment.
According to a motion filed by Venezuela’s lawyers, recent court decisions have helped to clear up what the court-appointed special master earlier described as a “cloud of uncertainty” surrounding the sale.
One such development happened last week, when a New York judge dismissed one creditor group’s arguments for a part of the same assets in the Delaware case.
According to Venezuela’s legal team, the extension would give bidders appropriate time to adapt their bids in response to what it called these shifting legal circumstances.
Some of the creditors also supported the extension in motions submitted to the court, recognising the need for clarity before finalising their bids.
Next steps: final hearing is still scheduled for July
Despite the delay in the bidding deadline, the overall timeframe for completing the auction remains unchanged.
According to a proposed calendar supported by some of the concerned creditors, the final hearing to determine the winning bid is still slated for July.
The court-appointed special master, who is in charge of the auction process, is anticipated to review the bids and recommend a winning offer next month.
The special master’s duty includes ensuring that the procedure is transparent and legal, which is especially important considering Citgo’s politically and diplomatically sensitive ownership situation.
The refinery, which is based in the United States, is one of Venezuela’s most valuable overseas assets and has been the subject of numerous disputes in US courts.
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