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Court upholds 2004 sale of Yukos core asset

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(updated 18:24 28.10.2014)
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A Moscow arbitration court has thrown out a motion by bankrupt oil company Yukos [RTS: YUKO] to overturn the 2004 sale of its core production unit, Yuganskneftegaz, a RIA Novosti correspondent reported Friday.
MOSCOW, February 16 (RIA Novosti) - A Moscow arbitration court has thrown out a motion by bankrupt oil company Yukos [RTS: YUKO] to overturn the 2004 sale of its core production unit, Yuganskneftegaz, a RIA Novosti correspondent reported Friday.

The bankrupt oil company, once Russia's leading crude producer, still has assets worth $22 billion that are to be sold off at auctions through the liquidation process. However, total claims from creditors against the company amount to around $26 billion.

The court hearings on Yuganskneftegaz, which was purchased two years ago by state-controlled Rosneft at what analysts considered a knockdown price, were postponed at the plaintiff's request to study materials submitted by the defendants in the case.

A 76.79% stake in Yuganskneftegaz was sold by the Federal Property Management Fund on December 19, 2004, in lieu of Yukos' tax arrears for 2000 and 2001. Several days later, Rosneft bought the asset from an unknown company, Baikal Finance Group, which won the auction.

The group was widely believed to be a vehicle set up to enable Rosneft to cheaply acquire the stake.

Yukos first challenged the auction in May 2005. The company claimed the sale of Yuganskneftegaz was conducted in violation of Russian and international law. Yukos lawyers also claimed the Federal Property Management Fund had deliberately underestimated the initial value of the asset.

The defendants in the case are the Federal Property Management Fund, the Russian Finance Ministry and a number of companies that participated in the auction.

Yukos hopes to collect 388.3 billion rubles ($14.5 billion) in losses from the defendants, which the battered company claims to have sustained after the sale of its core production unit.

Yukos was declared bankrupt August 1, 2006 following three years of litigation with authorities over the tax arrears.

The oil company, whose founder Mikhail Khodorkovsky, a vocal Kremlin critic, is serving an eight-year prison term for fraud and tax evasion, now faces huge claims from Yuganskneftegaz, the Federal Tax Service, Rosneft and more than 20 other companies.