During the CITGO auction process, Gold Reserve’s emergency request to the Delaware court continues to generate reactions, this time from Red Tree Investments LLC, which is asking to deny the request for the OFAC to clarify General License 5 (GL-5) regarding the rights of the 2020 Bond Holders.
Red Tree argues that a real emergency exists, as the extension of GL-5 by the Office of Foreign Assets Control (OFAC) is not new and does not prevent the 2020 Bond Holders from seeking injunctions to protect their rights.
Red Tree aims to prevent the Court from intervening in a way that could benefit Gold Reserve’s offer or limit the ability of the 2020 Bond Holders to safeguard their interests.
Red Tree on the bondholders in the CITGO auction
On June 25, 2025, Red Tree Investments LLC sent a communication to Judge Leonard P. Stark of the United States District Court for the District of Delaware, overseeing the case Crystallex Int’l Corp. v. Bolivarian Republic of Venezuela, in which the CITGO Petroleum Corporation auction is being supervised, in the context of responding to Gold Reserve’s emergency request.
The latter seeks clarification from the Office of Foreign Assets Control (OFAC) regarding General License 5 (GL-5) in relation to the rights of the 2020 Bond Holders. Red Tree opposes Gold Reserve’s emergency motion, as they believe a real emergency exists.
Red Tree argues that the latest version of GL-5 indicates no change in OFAC’s stance, and that the license does not address the most significant risk posed by the 2020 Bond Holders, which relates to their ability to seek judicial relief against transactions that violate their security rights.
They reminded that the OFAC has already clarified that the 2020 Bond Holders can pursue legal remedies to protect their rights.
Main arguments from Red Tree
Red Tree dismisses Gold Reserve’s request as they believe there is no emergency
In a letter to Judge Leonard P. Stark, Red Tree rebuts Gold Reserve’s claim of an “emergency,” noting that the latest version of GL-5 (GL-5S) was issued on June 20, yet Gold Reserve did not seek relief from the Court until June 24.
In Red Tree’s view, Gold Reserve’s motion is merely an attempt to “pressure the Special Master to choose their offer.” They cite a press release from Gold Reserve on this matter and argue that this “is not a legitimate reason for the court to request a coordinated branch of government to present its political views in an ’emergency,’ within 3 days.”
There is no change in OFAC’s position in GL-5
In their communication to the Delaware court, Red Tree highlights that the OFAC has “renewed General License 5 no less than nineteen times during this litigation,” repeatedly postponing the enforcement of the rights of the 2020 Bond Holders to execute 50.1% of the CITGO Holding shares.
They note that OFAC’s renewed license “once again is barely evidence, as Gold Reserve suggests, of a ‘definitive indication’ (…) that OFAC intends to continue suspending GL-5 beyond the anticipated closing date of the sale of PDVH shares.”
Red Tree also downplays the significance of the latest iteration of GL-5 being for six months instead of three, pointing out that “some of the more recent versions of GL-5 extended the moratorium for longer than three months.” They remind that GL-5R extended for four months.
OFAC License does not pose risk to bondholders
Red Tree argues that GL-5 “does not address the most serious risk posed by the claims of the 2020 Bond Holders regarding the closing of offers, such as that of Gold Reserve, which depend on borrowing from CITGO subsidiaries.”
GL-5 only regulates “transactions related to the provision of financing for, and other operations with, the 2020 8.5% Bond of Petróleos de Venezuela S.A.”
While Red Tree considers the clarification from OFAC unnecessary, if the court decides to seek its opinion as Gold Reserve proposes, it respectfully requests that the court also ask the OFAC about:
If the suspension of GL-5 implies that OFAC would continue those suspensions or deny any special license request if another party attempts to infringe the alleged rights of the 2020 Bond Holders, including without limitation regarding the sale of PDVH shares.
What remedies the 2020 Bond Holders are entitled to pursue under relevant sanctions regulations and FAQ No. 1124, beyond judicial relief, such as voting by proxy of CITGO Holding shares.
See in Sin Filtros “United States on alert: The threat is within”: