- The Washington Times - Thursday, December 16, 2004

HOUSTON (AP) — A U.S. bankruptcy judge late yesterday granted Russian oil giant Yukos’ request for a temporary injunction to block Sunday’s planned auction in Moscow of its main production subsidiary.

In issuing the injunction, U.S. Bankruptcy Judge Letitia Clark also accepted jurisdiction of Yukos’ Chapter 11 bankruptcy case, filed in Houston on Tuesday.

The company had called the filing its last resort to seek an emergency order canceling the auction of Yuganskneftegaz. Yukos now has 10 business days to seek a permanent injunction.

“Obviously we are pleased and encouraged by the judge’s ruling,” said Mike Lake, a spokesman for Fulbright and Jaworski, the Houston law firm representing Yukos.

He said the injunction doesn’t apply to the Russian government, but to a consortium of international banks, including Deutsche Bank, that are putting together a multibillion-dollar loan to finance an auction bid by Russia’s state-owned natural gas giant Gazprom.

Mr. Lake said Russia’s government could go forward with the auction, but the top bidder wouldn’t have the financing for the opening $8.6 billion bid.

“If the banks adhere to the ruling, which we hope they would, there would be no financing available for the banking syndicate,” Mr. Lake said. “It will be interesting to see what’s actually going to happen on Sunday.”

The injunction emerged from the first U.S. court action stemming from the company’s fight against what has been called a Kremlin-sponsored breakup. Russian authorities say Yukos owes $27.8 billion in taxes and set the auction to pay part of that bill.

The case also comes at a time when U.S.-Russian ties are being strained by Russian President Vladimir Putin’s increasingly autocratic rule and by the election furor in Ukraine, with American diplomats accusing Moscow of meddling in the vote in the former Soviet republic.

A key question was whether the bankruptcy was properly filed in Houston instead of Russia. Yukos Chief Financial Officer Bruce K. Misamore said the filing was proper because he operated out of his home office in Houston after getting an “informed message” two weeks ago advising him not to return to Russia.

But during cross-examination, Mr. Misamore said that “substantially all” of Yukos’ assets are in Russia. When asked how many of the company’s 100,000 employees are in the United States, he replied, “As of this time, one.”

The ITAR-Tass news agency in Russia reported a high-ranking source in the Moscow Arbitration Court said on condition of anonymity yesterday that the bankruptcy filing in the United States will have no legal consequences in Russia.

“Russia has no agreements with the United States that would allow one of the parties to even theoretically influence such processes on the territory of the other,” the source told the agency.

Matthew Botica, a Gazprom lawyer, didn’t immediately respond to a call for comment. Hugh Ray, a Houston attorney representing Deutsche Bank, also didn’t return a call for comment on the ruling.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide