A U.S. court officer has recommended that a $3.7 billion offer by an affiliate of Contrarian Funds serve as the minimum bid in the ongoing auction of shares in PDV Holding, the parent company of Venezuela-owned Citgo Petroleum. According to an article published by Reuters, the special master overseeing the auction believes the offer, made by Red Tree Investments, provides a strong balance between value and certainty for creditors seeking compensation from Venezuela’s debt defaults and expropriations. Federal Judge Leonard Stark must approve or reject the recommendation before the bidding process moves forward.

The auction, managed by a federal court in Delaware, aims to distribute up to $21.3 billion to 18 creditors, including Red Tree and other holders of defaulted Venezuelan bonds. This marks a shift from last year’s failed auction attempt, where most bidders declined a $7.3 billion offer from an Elliott Investment Management affiliate due to legal uncertainties. The special master selected Red Tree’s bid among four received by the March 7 deadline, emphasizing its fewer conditions compared to rival offers. If successful, the transaction would provide $3.24 billion in cash and $458 million in non-cash consideration.

Analysts have noted that Red Tree’s initial bid is significantly lower than Citgo’s estimated market value of over $10 billion, which could trigger higher offers in the upcoming topping-off period. Meanwhile, Venezuela’s government, led by President Nicolás Maduro, has strongly opposed the auction, calling it a “robbery” of the country’s foreign assets. The final sale hearing is set for July, and if the auction concludes, the winning bidder will take full control of PDV Holding, with proceeds distributed to creditors.