Gold Reserve and Venezuela seek to disqualify officials in sale
Bermudian-based Gold Reserve Ltd and the Venezuelan government have both filed motions to disqualify the US court-appointed officials overseeing the multibillion-dollar sale of Citgo’s parent company, alleging serious conflicts of interest that could derail the long-running Delaware proceedings.
In a statement released Friday, Gold Reserve said it has moved to disqualify Special Master, Robert Pincus, along with his advisers — the American law firm, Weil, Gotshal and Manges LLP, and investment bank, Evercore Inc — from the sale process of Petróleos de Venezuela Holding Inc, the American holding company that owns Citgo Petroleum.
The company said its motion, filed under seal with the United States District Court for the District of Delaware, is based on newly-discovered information showing that Weil, the law firm, has represented Elliott Management, one of the leading bidders, while simultaneously advising the Special Master on the sale.
Gold Reserve also alleged that both Weil and Evercore have ongoing business relationships with members of the 2020 bondholder group, who stand to receive large payments under Elliott’s bid.
Gold Reserve has also asked the court for a temporary stay of all sale decisions pending the outcome of the disqualification motion and has demanded further discovery from the Special Master and his advisers.
In a rare alignment, the Bolivarian Republic of Venezuela — together with Petróleos de Venezuela SA and its American affiliates — filed a separate but similar motion seeking to remove the same officials.
Both motions were filed under seal, with redacted versions to be posted publicly on Gold Reserve’s website.
The move marks a dramatic escalation in the high-stakes fight over control of Citgo, one of Venezuela’s most valuable foreign assets.
Gold Reserve and its consortium partner, Dalinar Energy, have argued that their $7.9 billion bid is the highest and should prevail under Delaware law, while the court-appointed Special Master has recommended a rival $5.9 billion bid led by Elliott Management and Amber Energy.
Gold Reserve, which is listed on the Bermuda Stock Exchange, said it is seeking “full transparency” for shareholders and intends to post all relevant filings on its website as they become public.
The Delaware court has not yet ruled on the motions.
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• For the complete statement on the disqualification motions, see Related Media
