A US Court of Appeals in Philadelphia on Wednesday heard parties involved in a long-running, court-organized auction of the parent company of Venezuela-owned refiner Citgo Petroleum.

Supporters defended a decision in a federal court in Delaware late last year that ordered the sale of the company for $5.9 billion to a hedge fund affiliate, while opponents including Venezuela, some creditors and rival bidders argued that the process was tainted, with the court passing over higher offers.

In November, a federal judge in Delaware approved the $5.9 billion bid from an affiliate of Elliott Investment Management for Citgo's parent PDV Holding to pay a group of Venezuela-linked creditors. This triggered the opposition, and the sale has not yet been executed, awaiting approval from the US Treasury Department.

An April deadline looms over Elliott's Amber Energy to preserve its offer.

The court's selection followed several bidding rounds in a case initiated by miner Crystallex International against Venezuela in 2017 for the expropriation of its assets, which allowed other creditors to join the litigation in pursuit of Citgo's parent as compensation.

Opposition parties in January asked the US Court of Appeals of the Third Circuit to vacate the sale order over an alleged conflict of interest involving firms retained by the court as advisors, procedural "errors" that excluded higher bids and what some of them called the "low" valuation of the assets. The court is expected to make a decision after the hearing. The main arguments discussed this week were: The court's use of a methodology combining price and "certainty of closure," or the likelihood that a bid would ultimately be executed, created controversy among bidders.

Some companies including miner Gold Reserve (GRZ.V) chose to submit high-price offers. Others, including Amber Energy, gave weight to transaction agreements they argued would help clear obstacles to execute a sale. The most important was a pact with holders of a defaulted Venezuelan bond who hold a collateral claim over one of Citgo's parents.

Some attorneys, including Crystallex's counsel Miguel Estrada, said then-US District Judge Leonard Stark in Delaware "went as far as he could to make (the process) transparent," while lawyer Katherine Wellington representing Citgo's ultimate parent PDVSA said the sale price was so low it "shocked the conscience." Venezuela, PDVSA and creditors including Gold Reserve alleged that a law firm hired by the court to advise on the auction had a work relationship with units of Elliott while the bidding was in process, which they argue "tainted" the process.

The parties tried to disqualify Stark and the court officer who oversaw the auction, Robert Pincus. Pincus has denied the allegations. Stark last year denied the disqualification motion.

PDVSA's lawyer said the auction "fundamentally hurts the people of Venezuela at a time when they are rebuilding their economy." The selected bid was about $7 billion lower than a valuation of assets completed by court-advising firm Evercore (EVR.N) and $12 billion below the figure presented by an expert brought by Venezuela to court, she said.

Citgo's valuation has increased since last year as strong refining margins have boosted profits. The company is projecting full-year 2026 earnings before interest, taxes, depreciation and amortization of some $5.8 billion, and a year-end cash balance of approximately $5.7 billion, it said in August.