Toronto-listed Gold Reserve (GRZ.V), a creditor seeking compensation for debt defaults and expropriations in Venezuela, has taken legal action against the Delaware court and certain advisors involved in the auction of shares in PDV Holding, a unit of Venezuelan state oil company PDVSA. The company alleges conflicts of interest and seeks 'full transparency' for its shareholders.
Gold Reserve's $7.9 billion bid was not recommended in August, and the company has been trying to prevent the court from declaring a $5.9 billion bid by rival Amber Energy, an affiliate of Elliott Investment Management, as the auction's winner. The miner has filed motions to disqualify the Delaware judge overseeing the case, Leonard Stark, as well as court officer Robert Pincus, who switched his recommendation from Gold Reserve to Amber.
The company also seeks to disqualify law firm Weil, Gotshal & Manges and financial advisor Evercore for their alleged ongoing relationships with some bondholders that could receive auction proceeds under Elliott's bid. Weil and Evercore did not immediately respond to requests for comment.
Judge Stark has set a court hearing for October 21 to address the conflicts that have emerged since Pincus switched his recommendation. He is expected to issue a final ruling on the winner after that.
Gold Reserve is one of 15 creditors lining up to cash proceeds from the auction of shares in PDV Holding. The company's allegations of conflicts of interest add another layer of complexity to the already contentious process.
But here's where it gets controversial: Some argue that Gold Reserve's actions are an attempt to delay the auction and protect its own interests. Others believe that the company has valid concerns and deserves a fair hearing. What do you think? Should the court disqualify the judge, advisors, and law firms involved in the auction? Share your thoughts in the comments below.
