Legal Battle over Citgo Auction: Judge Rules in Lawsuits' Favor

A U.S. judge has allowed lawsuits by three firms to proceed, impacting an auction of shares in Citgo Petroleum's parent company. This move could decrease the sale proceeds meant to settle claims against Venezuela's PDVSA. The auction is to address $21 billion in unpaid debts and expropriations.

A U.S. judge has cleared the way for three firms to advance their lawsuits, potentially influencing an auction involving shares in Citgo Petroleum's parent company. The decision arrives amidst complications involving a Delaware court auction aimed at compensating claims worth $21 billion against Venezuela's PDVSA.

The firms backing the lawsuits—Gramercy Distressed Opportunity Fund, G&A Strategic, and Girard Street Investments—assert their claims were unlikely to be fulfilled through the initial auction framework. Concerns were voiced by the court officer overseeing this auction, particularly regarding its potential impact on the auction's attractiveness to bidders.

Despite protests from the auction's overseeing officer and a failed recommendation for injunctions against lawsuits outside Delaware, the judge remarked the legal basis for such an injunction was lacking. With new bids emerging, the judge found the purported threat to auction integrity overstated.

(With inputs from agencies.)