Russian oil giant and former U.S. debtor-in-possession under chapter 11 OAO Yukos waved “good-bye” to the Houston federal courthouse yesterday by announcing that it would no longer pursue an appeal of U.S. Bankruptcy Judge Letitia Clark’s decision last month that dismissed the company’s chapter 11 case for lack of jurisdiction. Here are the earlier posts on the Yukos saga.
Yukos had requested both Judge Clark and U.S. District Judge Nancy Atlas to stay the order dismissing Yukos’ chapter 11 case pending the company’s appeal of that order, but both judges denied the stay request on the grounds that Yukos had failed to show a reasonable probability of success on the merits of its appeal. Yukos apparently concluded that its chances for a stay pending appeal at the Fifth Circuit Court of Appeals — not to mention its slim chance for success on the merits of the appeal generally — did not justify further machinations in the U.S. federal courts.
Yukos’ decision closes the chapter on an interesting “go for broke” chapter 11 strategy in its running battle with the Russian government. Although establishing bankruptcy jurisdiction in the United States federal courts for a Russian company was always a longshot, Yukos management does not have many alternatives left for attempting to salvage any value for shareholders. Despite the attraction of potentially lucrative business opportunities in Russia, the lesson of the Yukos case is that the Russian government remains a very powerful opponent of maintaining strong and valuable business interests there.