Death sentence' as oil giant Yukos declared bankrupt

Published on Wednesday 2 August 2006 00:58

RUSSIAN oil giant Yukos has been declared bankrupt, clearing the way for the firm to be liquidated and ending a three-year court battle for survival after it was hit with a huge back-tax bill.

The saga has seen former Yukos chief Mikhail Khodorkovsky jailed and parts of the oil firm's empire sold off.

Moscow Arbitration Court judge Pavel Markov's decision came as "little surprise", said Yukos lawyer Drew Holliner, given that Russian tax authorities and state-owned oil firm Rosneft are the group's biggest creditors. "It's the death sentence for the company," he added.

The court ruling backs a vote by shareholders which had rejected Yukos's assurances that it could remain in business and pay the $17 billion (9bn) it owes to creditors. One issue yet to be decided is that of which companies will gain control of the company's remaining assets through liquidation.

Yukos's bankruptcy supervisor Eduard Rebgun has been named as liquidator and he will now ask auditors to assess the value of its assets which will be sold at an open auction.

Analysts believe state-controlled oil company Rosneft - which gained Yukos' Yuganskneftegaz unit after a controversial auction in 2004 - or national gas monopoly Gazprom stand to benefit most from any sale.

Rosneft is already Yukos' second-biggest creditor behind the federal tax service.

Gazprom has said it is interested in acquiring a number of Yukos' assets, including its Tomskneft production subsidiary.

Yukos has struggled to survive since being hit with a series of tax demands totalling $27bn, demands linked to a political campaign against its founder, Khodorkovsky.