Yukos makes plea to US court in bid to avoid sale

Yukos emitted what appeared to be its final death rattle yesterday, filing for Chapter 11 bankruptcy in the United States just four days before its main production unit is due to be forcibly sold off to help pay an enormous back tax bill.

Desperately short of options, the Russian oil giant asked a Texan court to stay Sunday's auction of Yuganskneftegaz, a unit that pumps 60 per cent of its oil, as "a last resort" to protect the rights of "shareholders, employees and customers". It also asked the court to force Russia to enter into arbitration with it and to consider an undisclosed damages claim for "expropriation" of its property.

Yukos, which is majority-owned by the incarcerated oligarch Mikhail Khodorkovsky and his associates, claimed a US ruling would have worldwide jurisdiction and that the Russian authorities would be unable to ignore it.

Yukos has US investors and business dealings in Texas, and its chief financial officer Bruce Misamore is based there.

The US bankruptcy judge Letitia Clark said she would decide on the request for a temporary restraining order to stay the auction after hearing arguments in Houston today.

Russia's Federal Property Fund, the organiser of Sunday's contentious fire-sale, said it would only change its plans if it had an order from Russian as opposed to foreign bailiffs.

Barring a minor miracle, Sunday looks likely to mark the end of Yukos as a corporate behemoth. Its principal asset, Yuganskneftegaz, is expected to be snapped up for a fraction of its real value by the state-owned Gazprom, which has organised a huge loan through a network of Western banks. The starting price of US$8.6bn (NZ$11.9bn) is considered risible by market standards. Dresdner Kleinwort Wasserstein has previously valued it at up to $21.1bn.

Douglas McNabb, a federal criminal defence lawyer in Houston, said the hearing could derail the sale of Yukos assets if it discouraged the banks supporting Gazprom from going ahead.

"The bidders may still want to buy the business but if the financers shy away they will not be able to do so," he said.

Yesterday Yukos said it had assets worth US$12.3bn and debts of US$30.8bn. It has long maintained the tax claim was trumped up by the Kremlin as part of a campaign to punish Mr Khodorkovsky, Yukos' principal shareholder, who has been languishing in jail since October last year. The oligarch is fighting charges of fraud and embezzlement which, it is alleged, are also politically motivated.

Yesterday three board members, all non-Russians, stood down. Robert Amsterdam, Mr Khodorkovsky's lawyer, said his client and his associates would not give up the legal fight. Trading in Yukos shares was repeatedly suspended in Moscow yesterday. At one point the shares fell 14 per cent on news of the Chapter 11 move.

- INDEPENDENT