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Yukos sues energy groups for $20 billion

/ Source: Financial Times

Yukos escalated its battle for survival by suing four Russian energy groups for more than $20 billion in damages following the disputed seizure and sale of the oil company's main asset.

The long-awaited suit, filed late on Friday, comes ahead of a crucial court hearing in Houston this week which will determine whether Yukos retains the protection of the U.S. bankruptcy court.

The suit names Gazprom, Russia's state-run gas monopoly, and Gazpromneft, a former affiliate that had planned to take part in an auction for Yukos' Yuganskneftegas business last December.

It also cites Baikal Finance Group, an unknown company which paid $9.35 billion for Yugansk, and Rosneft, a state-controlled oil group that then purchased Baikal.

Yukos filed for bankruptcy protection in Houston last December in a last-gasp bid to block the sale of Yugansk, which was seized by the Russian government to settle back taxes allegedly owed by the company. The long-running campaign against Yukos is widely viewed as punishment for the political activities of Mikhail Khodorkovsky, a controlling shareholder on trial for alleged fraud and tax evasion.

The company secured a U.S. injunction to block the Yugansk auction. Which Gazpromneft unsuccessfully sought to overturn, though the auction went ahead anyway. However, its Chapter 11 filing has been challenged by Gazpromneft and the six banks that had planned to fund its bid for Yugansk.

U.S. district judge Letitia Clark will hear a challenge from Deutsche Bank on the validity of Yukos Chapter 11 filing in the U.S., and on the court's jurisdiction over the Russian group. Deutsche has argued that the U.S. risked becoming a jurisdiction of convenience since Yukos had so few assets in the country, and called for Yukos to seek redress through the Russian courts.

Yukos maintains it cannot secure a fair hearing in Russia. The company is being run by executives in London and Houston, who maintain they cannot return to Moscow for fear of arrest.

Yukos did not include Deutsche in its claim for damages, though it is still suing the bank to prevent it from doing any work related to Yugansk and its remaining assets.

Yukos last week dropped legal action against five other banks — ABN Amro, BNP Paribas, Calyon, JP Morgan Chase and Dresdner Kleinwort Wasserstein — alleged to have taken part in the Yugansk auction. The group also dismissed its case against Intercom and First Venture, the two other companies that had planned to take part in the auction.

Menatep, an offshore entity which owns 53 percent of Yukos, last week filed a $28.3 billion claim for compensation against the Russian Federation to seek redress for the state's role in dismantling Yukos. The claim was filed with the Vienna-based United Nations Commission on International Trade Law.

Yukos also filed its proposed bankruptcy reorganization plan on Friday and asked the court to set a May 1 deadline for any claims. It also repeated its call for any claims from the Russian government to be sent to international arbitration.