A bidder in the sale of Citgo's parent company to satisfy billions of dollars of Venezuelan debt has asked to disqualify a Delaware federal judge from the forced judicial auction, saying it submitted the top bid of $7.9 billion but unfairly lost out to a competitor's lower bid.

Mining company Gold Reserve Ltd. argued in its Friday motion to disqualify U.S. Circuit Judge Leonard P. Stark that new discovery has revealed material conflicts of interest related to special master Robert B. Pincus and the special master's advisers at law firm Weil Gotshal & Manges LLP and investment banking firm Evercore Inc.

While there is no evidence that Judge Stark has any actual bias against Gold Reserve, the district judge had consulted with the advisers, who themselves have conflicts of interest, and so the conflicts must be attributed to Judge Stark, Gold Reserve said.

The mining company also seeks an order disqualifying Pincus, Weil Gotshal and Evercore, along with a temporary stay of all decisions involving any bids submitted in the Citgo sale process.

Gold Reserve alleges that the special master, who is tasked with overseeing a fair sale process for shares of Citgo's indirect parent company, PDV Holding Inc., has been assisted throughout the process by conflicted advisers from Weil and Evercore.

PDV Holding is a U.S. subsidiary of the Venezuelan state-owned Petróleos de Venezuela SA,  and the indirect parent company of the oil giant Citgo. The court is conducting a long-awaited sale about seven years after defunct Canadian mining company Crystallex International Corp. won an attachment order over the PDV Holding shares to satisfy a $1.2 billion arbitral award it won after being ousted from a Venezuelan gold-mining project.

Pincus recommended Elliott Investment Management LP's bid, which was $2 billion lower than Gold Reserve's bid, while blocking other bidders from access and repeatedly favoring Elliott, according to the disqualification motion.

"The special master has been assisted throughout [the sale] process by conflicted advisers from Weil and Evercore," the motion said. "And not just assisted. Throughout this proceeding, these advisers have dominated communications with the parties — and, as the court is aware, with the court — while the special master often offers little input himself. Under their influence, the special master has made a series of decisions over the past 14 months that have favored Elliott Investment Management, a major client of both his advisers, and that other participants and observers have found inexplicable."

Not only do Weil and Evercore have longstanding financial ties with Elliott and bondholders through which they have collected undisclosed fees, but they have steered the sale process in their favor, according to the motion. The advisers have failed to disclose these conflicts and have misrepresented them to the parties and the court, minimizing them as "not material," the motion claimed.

A lawyer for Gold Reserve, Michael J. Bowe of Brithem LLP, told Law360 in an email Tuesday that the motion is a serious application that Gold Reserve did not undertake lightly.

"Although Weil redacted the magnitude of its conflict from public view, this cannot be sustained," Bowe wrote. "When the facts become known, the necessity of this motion will be clear."

Counsel for Crystallex declined to comment Tuesday.

Counsel for the other parties did not immediately respond to requests for comment.

On July 24, Venezuela called on Judge Stark to reject a Gold Reserve subsidiary's $7.4 billion bid to buy Citgo, arguing that the purchase price was well below half of the shares' fair market value of $18.6 billion. Gold Reserve later raised the bid price to $7.9 billion.

Pincus previously recommended on July 2 that Judge Stark approve the bid submitted by the Gold Reserve subsidiary, acquisition vehicle Dalinar Energy Corp, for all PDV Holding Inc. shares, saying it was the highest among those that met the court's bid requirements.

Pincus told the judge that the bid for the PDV Holding Inc. shares was significantly higher than a $3.806 billion revised stalking-horse bid submitted by an affiliate of Contrarian Capital Management earlier this year.

"Thus, the special master concludes that Dalinar's proposed sale transaction is the highest bid that he reasonably believes to be capable of being timely consummated after taking into account the factors in the court's guidance," Pincus wrote.

Gold Reserve is represented by Kevin J. Mangan, Matthew P. Ward and Stephanie S. Riley of Womble Bond Dickinson (US) LLP, by Matthew H. Kirtland, Katherine G. Connolly and Taylor J. LeMay of Norton Rose Fulbright US LLP, and by Michael J. Bowe of Brithem LLP.

Pincus is represented by Myron T. Steele, Matthew F. Davis and Bindu A. Palapura of Potter Anderson & Corroon LLP, and by Matthew S. Barr, David J. Lender, Jared R. Friedmann and Chase A. Bentley of Weil Gotshal & Manges LLP.

Venezuela is represented by A. Thompson Bayliss and Christopher Fitzpatrick Cannataro of Abrams & Bayliss LLP and by Donald B. Verrilli Jr., Elaine J. Goldenberg, Ginger D. Anders, George M. Garvey and Adeel Mohammadi of Munger Tolles & Olson LLP.

PDV Holding and Citgo are represented by Susan W. Waesco and Alexandra M. Cumings of Morris Nichols Arsht & Tunnell LLP and by Nathan P. Eimer, Lisa S. Meyer, Daniel D. Birk, Gregory M. Schweizer and Hannah Bucher of Eimer Stahl LLP.

Petróleos de Venezuela SA is represented by Samuel T. Hirzel II and Brendan P. McDonnell of Heyman Enerio Gattuso & Hirzel LLP and by Joseph D. Pizzurro, Kevin A. Meehan and Juan O. Perla of Curtis Mallet-Prevost Colt & Mosle LLP.

Crystallex is represented by Raymond J. DiCamillo, Jeffrey L. Moyer and Travis S. Hunter of Richards Layton & Finger PA, and by Robert L. Weigel, Jason W. Myatt, Rahim Moloo, Miguel A. Estrada, Lucas C. Townsend, Zachary Kady and Adam M. Smith of Gibson Dunn & Crutcher LLP.

The bondholders are represented by Daniel A. Mason, Jeffrey J. Recher, Paul A. Paterson and Tyler B. Myers of Paul Weiss Rifkind Wharton & Garrison LLP.

The case is Crystallex International Corp. v. Bolivarian Republic of Venezuela, case number 1:17-mc-00151, in the U.S. District Court for the District of Delaware.