A US judge overseeing the auction of shares in Citgo Petroleum’s parent company has dealt a blow to activist hedge fund Elliott Investment Management, ordering a reopening of the bidding process allowing other bidders access to company data, according to a report by Reuters.
This decision comes after a proposed deal from Elliott affiliate Amber Energy failed to win creditor support, particularly due to its structure, which sought to withhold proceeds from creditors while prioritising bondholder claims. This arrangement risked leaving minimal returns for the very creditors who initiated the case.
Judge Leonard Stark’s ruling, issued on Monday, mandates the virtual data room to reopen on 18 December, allowing bidders other than Amber Energy to review Citgo’s financial details and craft new offers for shares in PDV Holding, the Venezuela-owned parent company. The auction aims to resolve $21bn in claims linked to Venezuela’s expropriations and debt defaults.
Amber Energy had been in a favourable position for months, with exclusive access to Citgo’s data room while negotiating its $7.3bn conditional bid. However, this exclusivity sparked sharp criticism from creditors and Venezuela’s legal representatives, who argued it sidelined other interested parties and undermined fairness in the auction process.
The report quotes an unnamed lawyer familiar with the matter as saying that: “The exclusive access and conditional terms were widely seen as an overreach. Judge Stark’s decision signals a shift toward transparency and fairness, which could reopen opportunities for other hedge funds and institutional investors.”
