By Marianna Parraga
HOUSTON (Reuters) -Toronto-listed miner Gold Reserve on Monday accused firms advising a U.S. court on the auction of Citgo Petroleum’s parent of receiving some $170 million in fees from a bidder that was recommended as the winner of the process and parties that would obtain proceeds as a result.
The accusations are the latest twist in an auction that has dragged on for nearly two years and could threaten to slow it further.
The Delaware court on Monday began discussing the fees in a hearing following Gold Reserve’s motions earlier this month to disqualify a court officer and the judge overseeing the auction in addition to advising firms Weil, Gotshal & Manges, and Evercore over the alleged conflict of interest.
“Normal folks would reasonably question the impartiality of advisors who have received $170 million in fees from the very party whose bids they are evaluating in an auction process,” Michael Bowe, counsel for Gold Reserve, told the court.
Court officer Robert Pincus in August switched his recommendation for the auction’s winner to Elliott Investment Management’s Amber Energy from Gold Reserve subsidiary Dalinar Energy, prompting objections from rival bidders and creditors.
Gold Reserve is now arguing that Weil represented Elliott while the Citgo sale was ongoing, and that the two advising firms had relationships with some holders of Venezuelan bonds standing to receive auction proceeds under Amber’s proposal.
Weil, Gotshal & Manges, Evercore and Elliott did not immediately reply to requests for comment.
The auction of Venezuela-owned PDV Holding, parent of Houston-based refiner Citgo Petroleum, aims to compensate up to 15 creditors for past debt defaults and expropriations in Venezuela. A final winner has not yet been selected by the court.
Lawyers representing Venezuela also filed a motion this month to disqualify Pincus and the two advising firms. Gold Reserve is requesting a temporary stay of all decisions concerning any bids submitted pending resolution of the disqualification motions.
(Reporting by Marianna Parraga; Editing by Nathan Crooks)
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