Venezuela asks US court to reject Elliott affiliate's bid for Citgo parent

By Marianna Parraga

HOUSTON, Oct 21 (Reuters) - Lawyers representing U.S. refiner Citgo Petroleum and its owner Venezuela asked the court on Tuesday to reject a bid from an affiliate of Elliott Investment Management due to its "low price," which was below a rival offer submitted to court, and said the sale process was "defective."

A Delaware court is trying to complete the auction of Venezuela-owned PDV Holding, Citgo Petroleum's parent, to compensate up to 15 creditors for debt defaults and asset expropriations in the South American country.

A $5.9 billion bid from Elliott's affiliate Amber Energy was recommended in August by an officer overseeing the court-ordered auction, a switch from his previous recommendation of a $7.4 billion offer from a subsidiary of Gold Reserve GRZ.V. Amber's bid includes a separate pact to pay $2.1 billion to holders of a defaulted Venezuelan bond.

Delaware Judge Leonard Stark is expected to determine the final winner after a court hearing this week to discuss the bids and motions filed by Venezuela and Gold Reserve to disqualify the judge, the court officer evaluating the bids and two advising firms over alleged conflict of interest.

Amber's bid "is so low ... that it shocks the conscience of this court and can't be confirmed," Nathan Eimer, counsel for Citgo and PDV Holding, said during the hearing.

Since the U.S. imposed sanctions on Venezuela and the administration of President Nicolas Maduro in 2019, Citgo severed ties with its ultimate parent, Caracas-headquartered oil company PDVSA, and is now controlled by boards appointed by an opposition-led congress.

Both Maduro's government and the political opposition led by Maria Corina Machado reject the court-organized auction. The U.S. Treasury Department, which has shielded Citgo from creditors in recent years, must approve the auction's winner.