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US Judge Dismisses Yukos Bankruptcy Bid

A U.S. federal judge in Houston has thrown out the bankruptcy case filed in December by representatives of the Russian oil company Yukos. She ruled that the Russian government needs to be involved in any resolution of the case.

"The vast majority of the business and financial activities of YUKOS continue to occur in Russia. Such activities require the continued participation of the Russian government," said U.S. Bankruptcy Judge Letitia Clark.

The case came to Houston on December 14 when attorneys representing Yukos sought protection for company assets under what is known as Chapter 11 proceedings. Judge Clark ordered that all company assets be frozen until she had a chance to review the case, but the Russian government went ahead with the sale of Yukos' largest subsidiary.

In her ruling Thursday, Judge Clark said, in her words, "…it appears likely that agencies of the Russian government have acted in a manner that would be considered confiscatory under United States law…". However, she said, the matter before her was not whether there had been any wrongdoing, but whether her court had any jurisdiction. Her dismissal of the case gave a final answer to that question.

The Russian government had no representative in the court here in Houston and made clear that it would not abide by any ruling issued by a U.S. court. Lawyers from the German Deutsche Bank argued for dismissal of the case because international banks would be held back from issuing loans to Russian businesses that had any connection to the Yukos case as long as the case was tied up in a U.S. court.

The Russian government has levied a 27-and-one-half billion dollar back-tax bill on Yukos. The former head of the company, Mihkail Khodorkovsky, is currently in a Russian prison cell facing charges of fraud and tax evasion.

Russian President Vladimir Putin says his government is trying to purge criminal activity from private sector operations in his nation. Yukos representatives and Putin critics, however, say that Mr. Khodorkovsky and Yukos were targeted for political reasons.

The case was brought to Houston by Yukos Finance Chief Bruce Misamore, who was in London in December when he heard he would likely be arrested if he returned to Moscow. He then came to Houston and established a residence, where he also maintains his office. The only other Yukos connection to the United States are two bank accounts, one of which was for Mr. Misamore's expenses and the other for legal costs.