A bitter dispute has erupted in the American court-ordered auction of Citgo Petroleum’s parent company, as bidders and creditors sparred this week in Delaware over which multibillion-dollar offer should prevail.

Bermudian-based Gold Reserve Ltd, listed on the Bermuda Stock Exchange, is at the centre of the controversy.

The auction of Petroleos de Venezuela Holding, the American parent of Venezuelan-owned Citgo Petroleum, aims to compensate up to 15 creditors for debt defaults and expropriations in Venezuela, following an eight-year legal battle.

On Monday, Gold Reserve accused firms advising the court of receiving $170 million in fees from Elliott Investment Management and other parties poised to benefit from the sale. The company argued the payments raised serious conflict of interest concerns.

“Normal folks would reasonably question the impartiality of advisers who have received $170 million in fees from the very party whose bids they are evaluating,” said Michael Bowe, counsel for Gold Reserve, during the hearing, according to Reuters.

Gold Reserve filed motions seeking to disqualify Delaware Judge Leonard Stark; court officer, Robert Pincus; and advisory firms, Weil, Gotshal & Manges and Evercore, alleging conflicts of interest stemming from their prior relationships with Elliott and Venezuelan bondholders.

The following day, Tuesday, final arguments over the competing bids were heard as the process nears its conclusion. Citgo’s lawyers urged the court to reject a $5.9 billion offer from Elliott’s affiliate, Amber Energy, calling it “so low … that it shocks the conscience of this court”.

Amber’s bid, which includes a side agreement to pay $2.1 billion to holders of defaulted Venezuelan bonds, was recommended in August by Mr Pincus after three bidding rounds, in a reversal from his earlier support for Gold Reserve’s $7.9 billion proposal through its subsidiary Dalinar Energy.

Gold Reserve’s offer, about $2 billion higher, does not include the bondholder payment, instead proposing to distribute proceeds among a wider group of creditors.

“It would be a fundamental injustice in the event a substantial amount of value was diverted … to the 2020 bondholders on the basis of a pledge instrument that might be deemed invalid,” said Matthew Kirtland, counsel for Gold Reserve.

Lawyers for Amber countered that its proposal provides “the best combination of price and likelihood of transaction completion”, implying a business value of about $9.5 billion for Citgo.

The agreement with bondholders expires in early December, prompting Amber and some creditors to urge the court to act quickly.

The US Treasury Department must ultimately approve any winning bid.