Gold Reserve request for stay in Citgo parent auction is denied

By Marianna Parraga

HOUSTON, Nov 18 (Reuters) - A motion by Toronto-listed miner Gold Reserve GRZ.V to stay all further proceedings in the court-ordered auction of Citgo Petroleum's parent in Delaware was denied on Tuesday by a U.S. court of appeals, a filing showed.

The denial is another setback for the miner as it fights in court to keep alive its $7.9 billion bid for Citgo's parent PDV Holding, a U.S. subsidiary of Venezuela's state-owned energy company Petróleos de Venezuela, S.A., known as PDVSA.

A court officer overseeing the sale process in late August recommended a rival offer from an affiliate of Elliott Investment Management.

Motions to disqualify Delaware Judge Leonard Stark and court advisors involved in the evaluation over alleged conflicts of interest, which were filed by Gold Reserve and lawyers representing Venezuela, also were denied earlier this month.

"The request for oral argument and the mandamus petition are denied," Judge Patty Shwartz from the Court of Appeals of the Third Circuit said in an order signed on Tuesday.

A final decision on the auction's winner is pending. Fifteen creditors expect to get up to $19 billion from auction proceeds in a process aimed to compensate them for debt defaults and expropriations in Venezuela. PDV had been found liable for the South American country's debts as part of the eight-year court case.

Gold Reserve did not immediately comment, but said last week the sale process was "plagued with significant conflicts of interest."

Boards supervising Citgo last week said they were "concerned over irregularities" in the process, and added that the denial of motions to freeze the auction and discuss the allegations "casts a pall over the integrity of the entire process."