Russian oil company and former United States debtor-in-possession OAO Yukos lost another round in its legal battle with its creditors Friday as U.S. District Judge Nancy Atlas declined to grant the company a stay under Fed. R. Bankr. P. 8005 for a stay of Bankruptcy Judge Letitia Clark’s earlier order dismissing the Yukos chapter 11 case pending Yukos’ appeal of that order. Here are the previous posts over the past several months on the fascinating Yukos case.
As with its chapter 11 strategy generally, Yukos’ motion for a stay of Judge Clark’s dismissal order is a longshot because it is unlikely that the company can establish a reasonable likelihood of success on the merits of its appeal, which is a requirement for the granting of such a stay order. Despite the failure to obtain a stay, Yukos can and probably will continue its appeal of Judge Clark’s dismissal order to the District Court and, assuming a loss there, ultimately to the Fifth Circuit Court of Appeals. Inasmuch as two Fifth Circuit judges are noted experts on bankruptcy and reorganization law — Judge Carolyn Randall King and Judge Edith H. Jones — the Fifth Circuit decision on the Yukos appeal could be quite interesting.
Yukos essentially has nothing to lose by pursuing its longshot chapter 11 strategy in the United States courts. The company lost 60% of its oil production capacity when the Russian government conducted the December 2004 auction of Yukos key Yugansk subsidiary. Absent relief from a U.S. court, it is doubtful that any other legal move will place the Russian government or Yukos’ bank creditors sufficiently at risk that they feel compelled to enter into settlement negotiations with Yukos.
In the meantime, the Russian government continues to pursue criminal charges against various Yukos executives, including its former CEO and primary owner, Mikhail Khodorkovsky.