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A federal judge on Thursday denied efforts to unseat himself and the court-appointed special master overseeing the sale of Citgo’s parent company, ruling that the attempts were both procedurally flawed and legally baseless. The sale aims to satisfy over $22 billion in Venezuelan debt, in what has become one of the most closely watched asset auctions in U.S. court history.

In a 54-page opinion, U.S. Circuit Judge Leonard P. Stark concluded that the challenges were untimely and based on waived arguments. He further ruled that neither his impartiality nor that of Special Master Robert Pincus, along with his advisers at Weil Gotshal & Manges LLP and Evercore Inc., could be reasonably questioned.

The Long Road to the Citgo Sale

Judge Stark, formerly of the District of Delaware and now on the Federal Circuit, continues to oversee the sprawling litigation brought by Venezuela’s creditors. The motions to disqualify him were filed by Gold Reserve Ltd., Venezuela, state-owned oil company PDVSA, and Citgo, whose parent, Citgo Holding Inc., is indirectly owned by PDVSA through PDV Holding Inc.

The shares of PDV Holding are being auctioned off under court supervision — a historic and contentious process designed to compensate creditors holding billions in unpaid arbitral awards.

Accusations of Conflict and Bias Rejected

The challengers alleged that Pincus and his advisers were compromised due to their connections with Elliott Investment Management, whose $5.892 billion bid for PDV Holding received Pincus’ endorsement. They also pointed to millions in fees paid to Weil Gotshal, which represents bondholders owed nearly $3 billion by Venezuela, known as the 2020 bondholders — entities that hold a 50.1% interest in Citgo Holding.

But Judge Stark was unmoved. He wrote that the transparency of the sale process “eliminated opportunities for mischief,” calling claims of favoritism toward Elliott “selective and unconvincing.” He also dismissed Gold Reserve’s claim of actual bias, reaffirming that no reasonable observer could question the court’s impartiality.

A “Daunting Task” and High Stakes

Judge Stark defended the necessity of appointing qualified legal and financial advisers, noting that excluding every entity with prior business ties “would undermine, if not entirely defeat, the court’s goal to maximize value.”

He observed that these advisers “inevitably have precisely the types of entanglements” that the movants claimed were disqualifying. He further noted that Venezuela and its allies sought failure, as they feared a favorable ruling for Elliott over Gold Reserve’s higher $7.382 billion offer, which was initially recommended but later withdrawn.