A U.S. court officer overseeing an auction of shares in Citgo Petroleum's parent company, owned by Venezuela, is recommending a $3.7 billion offer by an affiliate of Contrarian Funds as the minimum bid for a new bidding round this year, as per a court document filed on Friday.

The special master in charge of the auction received four potential "stalking horse" bids for shares in PDV Holding, the parent company of Citgo, by a deadline on March 7. The recommendation is for the offer from Red Tree Investments, an affiliate of Contrarian Funds, which the special master believes has the least conditions and a substantial purchase price.

Judge Leonard Stark will need to approve or reject this recommendation before the auction proceeds. The Delaware court decided to set a baseline bid for PDV Holding following the rejection of a $7.3 billion offer last year by an Elliot Investment Management affiliate.

The timeline includes a period for rival bids to be submitted, with a final hearing scheduled for July. Stark's aim is to maximize proceeds for creditors in the long-standing case involving PDV Holding and Citgo. If the stalking horse bid is successful, the acquiring company will take 100% of PDV Holding's shares, with funds distributed to creditors upon closing. Red Tree's proposal includes $3.24 billion in cash and $458 million in non-cash considerations, as stated in court filings.