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The special master overseeing the auction of Citgo's parent company, PDV Holding Inc. (PDVH), has scrapped his proposed sales plan after realizing it failed to garner sufficient support from creditors. Robert Pincus, appointed by the court to lead the sale, informed U.S. Circuit Judge Leonard P. Stark on Tuesday that a new approach is necessary to address concerns about timing, transparency, and competitive bidding.

The auction is part of a long-running effort to satisfy a $1.2 billion arbitral award owed to Crystallex International Corp. and other creditors of Venezuela.

Original Plan Abandoned

Pincus revealed in September that he had selected Amber Energy Inc., an affiliate of hedge fund Elliott Investment Management LP, as the leading bidder with a $7.286 billion offer. However, in his latest filing, Pincus acknowledged the plan lacked adequate support and proposed a "significant pivot" to streamline the process.

Instead, Pincus suggested reopening the bidding process after a Dec. 13 status conference. Potential bidders would be granted access to a virtual data room, followed by 90 days to submit final bids.

Sale’s Importance to Creditors

PDVH, the indirect parent company of oil giant Citgo, is a U.S.-based subsidiary of Venezuela’s state-owned Petróleos de Venezuela SA (PDVSA). Citgo represents Venezuela’s most valuable seizable asset, making it a critical resource for satisfying not just Crystallex’s claim but those of numerous other creditors owed billions.

The auction was set in motion to enforce a 2018 attachment order over PDVH shares granted to Crystallex, which had been ousted from a Venezuelan gold mining project. After years of legal battles and delays, including U.S. sanctions on Venezuela, the Biden administration approved the sale in April 2023, allowing the process to proceed.

Challenges in the Sale Process

Pincus’s original plan faced skepticism due to concerns about fairness and clarity for all creditors. Some parties criticized the reliance on a stalking horse bidder, arguing it discouraged competition. The revised plan aims to address these concerns by offering a more inclusive and expedited process.

In addition to Crystallex, more than a dozen creditors have obtained court permission to participate in the sale, raising the stakes for ensuring equitable treatment of competing claims.

Broader Legal and Political Context

The Citgo auction has unfolded against a backdrop of legal and political complexities, including U.S. sanctions and appeals stretching to the Supreme Court. Judge Stark, who continues to oversee the case despite his 2022 elevation to the Federal Circuit, has faced challenges balancing creditor demands with legal constraints on PDVH’s sale.