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A Delaware federal judge has agreed to extend the critical deadline for the auction of Citgo’s parent company, PDV Holding (PDVH), in a significant development amid the ongoing Venezuela debt fight. The extension follows a “monumental” ruling in New York that partially halted parallel litigation by creditors outside the Citgo sales process.

U.S. Circuit Judge Leonard P. Stark has extended the deadline for submitting topping bids above the current $3.7 billion floor bid — submitted by a Contrarian Capital Management affiliate — from May 28 until at least June 2. The extension aims to encourage a more competitive bidding process.

Court-appointed special master Robert Pincus filed a statement supporting the deadline extension, noting that it “may lead to a more robust bidding process through the submission of new and improved topping bids.”

PDVH, a U.S. subsidiary of the Venezuelan state-owned oil company Petróleos de Venezuela SA (PDVSA), is the indirect parent of Citgo. The auction, nearly seven years in the making, arises from Crystallex International Corp.’s 2018 attachment order of PDVH shares to satisfy a $1.2 billion arbitral award related to a Venezuelan gold mining dispute.

Several other Venezuelan creditors have been approved to participate in the sales process. However, the auction is unlikely to fully resolve Venezuela’s extensive debt, prompting some creditors to pursue litigation in other jurisdictions, including New York.

The extension request followed U.S. District Judge Jed S. Rakoff’s recent decision declining to order PDVH to pay $358 million in defaulted bonds on the basis that PDVH is PDVSA’s alter ego. While Judge Rakoff did not provide detailed reasoning in the order, he confirmed PDVSA and its subsidiary’s liability for the debt, with a full written opinion pending.

Pincus previously warned the Delaware court that the New York litigation appeared aimed at circumventing the Citgo sales process and disrupting the court-ordered priority among creditors.

Venezuela called Judge Rakoff’s ruling a “monumental development” that clears a significant cloud of uncertainty over the PDVH shares, justifying the need for an extended bidding period to attract serious offers that reflect diminished litigation risks.

Energy company Vitol Inc., a potential bidder, emphasized in a recent court filing that the New York decision “fundamentally alters the topping period dynamics,” reducing risks that have constrained bid values.

Crystallex opposed the extension, describing Venezuela’s request as “the latest in a series of meritless attempts to delay the sale of the PDVH shares.”

The ongoing auction remains a critical step for Venezuela’s creditors, with Citgo representing the country’s most significant seizable asset. The complex litigation has spanned multiple appeals, including a 2020 Supreme Court refusal to hear the case, and was delayed by U.S. sanctions until the Biden administration authorized the sale in April 2023.

Judge Stark, elevated to the Federal Circuit in 2022, continues to oversee key creditor actions against Venezuela in Delaware.