The judicial expert assigned by the Delaware Court to oversee the CITGO auction, Robert B. Pincus, recommended Red Tree Investments as the primary bidder for the purchase of PDV Holding, despite its lowball offer, which is nearly half that of Gold Reserve Ltd.
Pincus’s recommendation outraged the other investors interested in acquiring CITGO Petroleum Corporation, particularly Gold Reserve Ltd., which had offered USD 7,081 million for the refinery, a figure significantly higher than the USD 3,380 million bid from Red Tree.
Contrarian Capital Management is part of a group of bondholders fighting in court for a preferred position on the list of creditors of Venezuela and PDVSA claiming payment for their debts through CITGO, as previously reported in Venezuela Política.
Pincus’s Recommendation
Additionally, Red Tree Investments LLC has been contending with the Stock Purchase Agreement (SPA) of PDV Holding concerning cash payments and non-monetary compensation to senior and junior creditors. Recently, the court dismissed the objections raised alongside Crystallex against the positions defended by PDVSA, PDVH, and CITGO.
Robert B. Pincus advised the Delaware Court that Red Tree Investments should be selected as the bidder to buy PDV Holding, which owns the shares of CITGO Petroleum Corporation, as denounced by Gold Reserve Ltd. on April 7 of this year.
Gold Reserve, along with other members of its consortium, opposes what they deem an unfair bidder, arguing that PDV’s shares should be sold to the highest bidder.
The Delaware District Court has scheduled a hearing for April 17, 2025, to resolve objections to Robert Pincus’s recommendation to select Red Tree Investments as the main bidder for the purchase of PDV Holding shares, the indirect parent of CITGO.
Gold Reserve’s Complaint
Gold Reserve, along with other parties, protested against what they call an abusive bidder, asserting that this prevents PDV Holding from achieving a more favorable sale. They believe that Red Tree’s offer undervalues the creditors of Venezuela and Petróleos de Venezuela S.A. (PDVSA), who have obtained a court order to participate in the CITGO auction.
Pincus recommended a Trojan horse offer, which serves as a starting point in the bidding process to supposedly encourage new bids and generate competitive tension among bidders.
According to Robert Pincus, Red Tree’s offer is the one that can help mitigate the conditionality and uncertainty regarding the risks associated with the litigation of PDVSA 2020 bondholders, particularly in relation to the validity of the securities.
ConocoPhillips expressed support for the selection of the bidder proposed by the judicial expert, while PDV Holding and CITGO reminded that Delaware law requires that property sold under court order must be worth at least 50% of its market value.
The Controversial Pincus
Robert Pincus is a figure considered controversial
In February, Robert Pincus stated in court that there were other potential bidders, who had been contacted in prior rounds and had signed confidentiality agreements, but he did not specify how many of those bidders there were.
It was learned that none of the thirty new parties contacted by the CITGO auction supervisor signed confidentiality agreements.
Pincus is regarded as a controversial figure, often associated with scandalous cases and opaque judicial processes, as well as displaying a pattern of overcharging in his fees. CITGO is part of those who have accused him and objected to the judicial expert’s charges. There have even been accusations of conflicts of interest between Robert Pincus and the Delaware court (1).
Source consulted:
1) Coastal Network. (S/F). “Robert Pincus, controversial lawyer at the center of multiple legal battles over exorbitant fees and alleged fraud”. Available at: https://coastalnetwork.com/robert-pincus/
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