US District Court Considering Yukos's Plight

by Glen Shapiro, LawAndTax-News.com, New York

14 March 2005

Beleaguered Russian oil firm, Yukos has made a last ditch attempt to secure bankruptcy protection in the United States, it emerged last week.

In an unsuccessful attempt in late 2004 to prevent the Russian government from selling off one of its key assets to pay a disputed tax liability, Yukos sought bankruptcy protection in Houston, claiming jurisdiction on the grounds that it has two Texas bank accounts, and that its finance chief is resident in the state.

However, US Bankruptcy Judge Letitia Clark ruled late last month that this did not constitute a sufficient US presence to secure the firm Chapter 11 protection, and rejected a subsequent request from the firm to reconsider.

Yukos stated at the time that an appeal to the US District Court would likely be its next move, and true to its word, last week asked US District Judge Nancy Atlas to afford its remaining assets protection while it launches a formal appeal against Judge Clark's decision.

According to reports, since the dismissal of the case, the firm's insurance for directors and officers has been cancelled, its appeal against a 2002 tax bill has been denied, and investigations have been launched into the chief executive of its Tomskneft unit.

Speaking last Wednesday, Judge Atlas announced that she would reach a verdict by March 18, stressing that the firm's arguments deserve "careful consideration and analysis in writing".

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