Deutsche Bank asks judge to dismiss Yukos bankruptcy

Dec 29, 2004 01:00 AM

Deutsche Bank wants a US Bankruptcy Court in Houston to dismiss the filing of Russian oil giant Yukos for lack of jurisdiction, contending the company has no American presence beyond two small bank accounts and the residence of its financial chief.
In its filing, the bank said Yukos' filing was nothing more than a desperate and unsuccessful effort to thwart the auction of its main production subsidiary in an ongoing tax dispute with the Russian government.

Deutsche Bank was one of a consortium of banks -- including ABN Amro and Dresdner Kleinwort Wasserstein -- that had intended to fund a $ 10 bn to $ 13 bn bid by state-owned natural gas company Gazprom to buy Yuganskneftegaz, which produces 60 % of Yukos' oil and 11 % of Russia's oil.
The Russian government engineered the Dec. 19 auction to pay off some of the $ 27.5 bn in back taxes it says is owed by Yukos, which the company disputes. Mike Lake, a spokesman for Yukos' lawyers, said the company is confident its Chapter 11 case was filed in the proper venue and that "we are prepared to be back in court defending that position again."

The consortium froze the money after US Bankruptcy Judge Letitia Clark in Houston granted an emergency injunction to block the auction on Dec. 16, two days after the oil company filed its Chapter 11 case. Yukos claimed the bankruptcy was properly filed in Texas because CFO Bruce Misamore was conducting company business from his home in Houston, having returned there earlier in December after learning that he may be targeted by Russian authorities if he returned to Moscow. Also, Yukos put $ 7 mm in two Houston bank accounts to cover legal fees and Misamore's costs.
In granting the injunction, Clark accepted jurisdiction of the bankruptcy. Her order was upheld by US District Judge Nancy Atlas when Gazprom appealed.

Russia forged ahead with the auction as planned. But an unknown company, BaikalFinansGroup, bought the subsidiary for $ 9.4 bn -- at least half of what Yukos claims it is worth. Days later Rosneft, a state-owned oil company that is being folded into Gazprom, bought BaikalFinansGroup.
Some have speculated that Gazprom, an international gas energy titan that's 40 % owned by Russia, was involved in the winning bid. Yukos attorneys told Clark the company plans to wait until a sale of its key production subsidiary is finalized in January to seek $ 20 bn in damages from the buyer.

The company said it will serve notice in several publications that the auction violated US bankruptcy law, which Yukos says protects all Yukos assets upon the Chapter 11 filing. Deutsche Bank said in the filing that Houston was "a jurisdiction in which Yukos owns no real or personal property and conducts no business operations."
Yukos founder and former CEO Mikhail Khodorkovsky accused the Kremlin of stealing his Yukos oil empire with legal maneuvering in a letter from prison. Khodorkovsky is being tried for fraud and tax evasion, and has been jailed for 14 months.

Source: The Associated Press
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