The Russian Government is being challenged with the rule of law, United States Bankruptcy Code style.
In a stunning development, embattled Russian oil giant Yukos has filed a chapter 11 case in Houston late Tuesday and requested a temporary restraining order against the Russian government’s auction of its main production unit that is currently scheduled for this Sunday.
H’mm. How would you like to try and enforce that TRO?
Here are earlier posts on the problems that Yukos has been experiencing with the Russian government. On one hand, Yukos’ defenders claim that the Russian government’s campaign against Yukos and its owners — particularly jailed CEO Mikhail Khodorkovsky — is an effort to silence political opposition to Russian president Vladimir Putin, while Putin and his supporters claim that the government is simply cracking down on Yukos because of shady bookkeeping and corruption. Mr. Khodorkovsky has been in jail over a year and is currently being tried in Russia on charges of fraud and tax evasion.
Russian tax authorities claim that Yukos owes the government a total of $27.8 billion in unpaid taxes, so the government is auctioning Yukos’ subsidiary Yuganskneftegaz (how’s that for mouthfu?) — which produces about 60% of Yukos’ oil production — on Sunday to pay at least a portion of the indebtedness. Yukos supporters contend that the government auction is a sham that is intended to transfer the unit to a government favored company such as state gas giant Gazprom. The starting price for the auction is $8.6 billion.
In its initial chapter 11 pleadings, Yukos claimed that its total assets are worth approximately $12.25 billion and that its total debts were about $30.75 billion.
The case information for the chapter 11 case is case no. 04-47742, Yukos Oil Company, Debtor and is pending before U.S. Bankruptcy Judge Letitia Z. Clark. A hearing on Yukos’ request for the temporary restraining order is scheduled for 11:15 a.m. this morning in Houston. Zack Clement of Fulbright & Jaworski is representing Yukos.