Judge in Citgo share auction rejects bid to block Gramercy fund lawsuits By Reuters

HOUSTON (Reuters) – Lawsuits by three companies seeking to improve their chances of receiving proceeds from an auction of Citgo Petroleum shares can proceed, a U.S. judge ruled in an order issued on Monday.

The decision could reduce the proceeds of any sale, said a court official overseeing the auction in Delaware federal court, in a motion to block parallel lawsuits in which shares in Citgo’s parent PDV Holding are being auctioned for default by Venezuela and state oil company PDVSA. and to settle $21 billion in expropriation claims.

PDV is the US subsidiary of PDVSA and is the sole indirect shareholder of Citgo.

Three related companies: Gramercy Distressed Opportunity (SO:) Fund, G&A Strategic and Girard Street Investments – filed parallel lawsuits in other courts after their claims were unlikely to fully cover the claims in the Delaware court auction.

Gramercy declined to comment.

A court official overseeing the auction had asked a judge to block their claims from Texas and New York, saying they could reduce the bids.

Elliott had threatened to pull out of the auction if the injunction was not released, a spokesman declined to immediately comment.

U.S. District Judge Leonard Stark, who called the denial of the injunction his “least worst option,” strongly opposed the motion by the Special Master, a court official who oversees the auction.

The proposed motion has no legal basis, and evidence from the new pleadings shows that Gramercy’s and others’ claims “are not nearly as big of a problem as the Injunction Motion makes them out to be,” Stark wrote.

The stock auction was “never intended” to ward off the risk that others might try to seize Venezuela’s assets.