Soaring legal fees in snarled Citgo auction rankle companies
2024.11.25 13:43
By Gary McWilliams and Marianna Parraga
HOUSTON (Reuters) – Court advisers have billed nearly $30 million for a stalled auction of shares in a parent of Venezuela-owned oil refiner Citgo Petroleum, raising the ire of creditors that have waited years to get compensation.
Citgo, the crown jewel of Venezuela’s overseas assets, sits at the center of a Delaware court auction in which 18 companies seek to collect up to $21.3 billion for debt defaults and expropriations in the South American country.
Bids in the auction’s second round were submitted this year, and the advisers, including an officer appointed by the court to oversee the process, were to deliver a recommended winner in July.
The advisers went on to negotiate exclusively with an affiliate of investor Elliott Investment Management, which has resulted in a bid opposed by many creditors as deficient.
Four creditors in a court filing challenged the advisers’ $4.1 million bill for September, saying fees “have increased by a staggering amount” and were likely to go higher. The latest bill is five-and-a-half times the fees for September 2023 and includes costs for more than 70 law firm employees, with individual charges up to $2,350 an hour.
Rusoro , which has a pending $1.48 billion claim in the case, also criticized the advisers’ reworking of one proposal, calling the result neither “a material improvement or a helpful development.”
U.S. Judge Leonard Stark last week rebuked law firm Weil, Gotshal & Manges, investment banker Evercore and court official Robert Pincus for not following his rules in their dealings with Elliott affiliate Amber.
Representatives for Weil, Evercore, and Pincus did not reply to requests for comment.
Stark proposed to redirect the auction, leave behind one of the red lines set by Amber, provide bid details to the 18 companies and provide them a say in how proceeds are to be distributed.
Amber has threatened to walk away if the auction proceeds as Stark has indicated he wants it to go. An Amber spokesperson did not have an immediate comment.
The revised process is expected to lead to at least two bids once Citgo reopens access to its financial and operational data. The winner could receive three U.S. oil refineries, energy pipelines, distribution terminals, and fuel supply to 4,200 retail outlets.
Groups involved in the auction have repeatedly told Pincus that he “should stop wasting time and money pursuing Elliott’s non-viable and inadequate bid,” an attorney for Venezuela wrote to the court.
