updated 3/22/2005 4:37:16 PM ET 2005-03-22T21:37:16

Withered Russian oil company Yukos dropped its case in U.S. courts Tuesday, saying it had no reasonable prospect of obtaining relief under U.S. bankruptcy law.

The company had sought U.S. protection from Russian government-ordered selloffs of its assets.

"We will now focus our efforts elsewhere to survive as a going concern and obtain compensation for assets that have been improperly expropriated from us," Yukos chief executive officer Steven Theede said in a statement.

Yukos spokesman Mike Lake said Tuesday's court filing "in effect will end" Yukos' case.

Theede said a stay granted by the U.S. courts helped preserve the value of Yukos' estate and the company appreciated the "fairness with which it was treated by the United States Court."

Last week, U.S. District Judge Nancy Atlas rejected Yukos' request that she protect the company's remaining assets while it appealed a bankruptcy judge's dismissal of the company's Chapter 11 case filed in Houston in mid-December.

Yukos turned to Atlas after U.S. Bankruptcy Judge Letitia Clark last month threw out its bankruptcy and related lawsuits and refused to change her mind a week later. The company lost 60 percent of its oil production capacity with the Russian government-ordered December sale of a key subsidiary in Moscow.

Without protection, Yukos claimed the company could disappear before an appeal ran its course if the Russian government orders more asset sales to further pay a disputed $27.5 billion back-tax levy.

"That's the right decision," said Hugh Ray, an attorney for Deutsche Bank, which wanted Clark to throw out the bankruptcy. "It saves them money, and it is an efficient thing to do."

Yukos filed for bankruptcy in Houston days before the Dec. 19 auction of Yuganskneftegaz. The company has no assets in the United States except two bank accounts. Its displaced finance chief operates out of his Houston home.

Clark blocked the sale, but the Russian government ignored her order. A shell company later acquired by state-owned oil company Rosneft bought the subsidiary.

However, Deutsche Bank and other banks froze billions of dollars intended to fund a bid on Yuganskneftegaz by Gazpromneft, a former unit of Russian natural gas monopoly Gazprom. Deutsche Bank said continued litigation could hinder international banks from providing loans or otherwise participating in deals in Europe and Asia that could involve Yuganskneftegaz or other Yukos assets.

Clark's decision also left Yukos without a U.S. forum to sue alleged participants in the Yuganskneftegaz sale, effectively squashing the company's $20 billion lawsuit against Gazpromneft, Gazprom, Rosneft and others.

"We are very pleased that this matter has been finally put to rest," said Mike Goldberg, a Baker Botts attorney representing Gazpromneft. "As we have always asserted, the dispute between a Russian company and the Russian taxing authority belongs in Russia, not the United States."

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