Yukos Oil wrongfully declared bankrupt according to Dutch rules

09 May 17

NOS News NOS

The Russian judgment in which the Yukos oil company was declared bankrupt in 2006 is not recognised in the Netherlands. The Amsterdam Court of Appeal determined this. According to the Court the Russian authorities were after Yukos Oil’s bankruptcy and elicited it. Recognition of an illegitimate judgment “violates Dutch public policy”, the Court determined.

The Russian tax authorities wrongfully imposed many billions worth of tax assessments and fines on Yukos, which the company was to pay within a short amount of time. A proposal by Yukos for a payment arrangement was not accepted, after which the company went bankrupt. It was subsequently sold to the Russian state oil company Rosneft, among others.

Auctioning parts of Yukos to other companies was also unlawful, according to the Court.

Worthless shares

The case was brought by Promneftstroy, one of the new owners of Yukos. In the decision, the Court established that the company paid 307 million dollars for shares of Yukos Finance, one of Yukos’ foreign branches, but received nothing in return.

The Court stated that Yukos’ receiver was not competent to transfer the shares and that Promneftstroy was aware of this risk when purchasing the shares. The fact that it did happen is no reason to reach another decision, the Court said.

Dutch letterbox

The case was conducted in the Netherlands because Yukos’ foreign branches are hidden behind a protective construction in a Dutch foundation.

Yukos was Russia’s largest oil company around 2006. It was led by a major opponent of president Putin’s, the wealthy businessman Mikhail Khodorkovsky. He subsequently lost much of his wealth. He was imprisoned for tax evasion and fraud from 2005 to 2013. It is assumed that the case was brought to prevent Khodorkovsky from going into politics.

Click here to read the original article in Dutch.

DISCLAIMER: The English version is a translation from the Dutch original NOS article and is for information purposes only. In case of a discrepancy, the Dutch original will prevail.