HOUSTON -- Russian oil giant Yukos has no Texas ties beyond a few million dollars in bank accounts and a displaced chief financial officer and shouldn't be able to seek bankruptcy protection in Houston, Deutsche Bank said in a court filing yesterday.
The bank contends Yukos filed for bankruptcy this month in Texas in a desperate, and unsuccessful, bid to stave off the Dec. 19 auction of its top subsidiary as part of an ongoing tax dispute with the Russian government.
"This blatant attempt to artificially manufacture a basis for jurisdiction constitutes cause to dismiss this case," the bank said.
Mike Lake, a spokesman for Yukos' lawyers, said yesterday that Yukos remains confident the jurisdiction of the Chapter 11 case is proper and "we are prepared to be back in court defending that position again."
Deutsche Bank was one of a consortium of banks -- including ABN Amro and Dresdner Kleinwort Wasserstein -- that had intended to fund a $10 billion to $13 billion bid by state-owned natural gas company Gazprom to buy Yuganskneftegaz, which produces 60 percent of Yukos' oil and 11 percent of Russia's oil.
The Russian government planned to sell the subsidiary to pay off some of the $27.5 billion in back taxes it says is owed by Yukos, which the company disputes.
The consortium froze the money after US Bankruptcy Judge Letitia Clark in Houston granted an emergency injunction to block the auction on Dec. 16, two days after the oil company filed its Chapter 11 case.
Yukos claimed the bankruptcy was properly filed in Texas because chief financial officer Bruce Misamore was conducting company business from his home in Houston, having returned there earlier in December after learning that he may be targeted by Russian authorities if he returned to Moscow. Also, Yukos put $7 million in two Houston bank accounts to cover legal fees and Misamore's costs.
In granting the injunction, Clark accepted jurisdiction of the bankruptcy. Her order was upheld by US District Judge Nancy Atlas when Gazprom appealed.
Russia forged ahead with the auction as planned. But an unknown company, BaikalFinansGroup, bought the subsidiary for $9.4 billion -- half of what Yukos claims it is worth. Days later Rosneft, a state-owned oil company that is being folded into Gazprom, bought BaikalFinansGroup.
Some have speculated that Gazprom, an international gas energy titan that's 40 percent owned by Russia, was involved in the bid.
Last week Yukos attorneys told Clark the company plans to wait until a sale of its key production subsidiary is finalized next month to seek $20 billion in damages from the buyer.
Yesterday the company said it will serve notice in several publications that the auction violated US bankruptcy law, which Yukos says protects all Yukos assets upon the Chapter 11 filing.
Deutsche Bank said in yesterday's filing that Houston was "a jurisdiction in which Yukos owns no real or personal property and conducts no business operations."
In its filing, the bank also suggested the European Court or an international arbitration tribunal as more appropriate jurisdictions for the legal fight between Russia and Yukos.
In a letter from prison in Russia published yesterday, Yukos founder and former chief executive Mikhail Khodorkovsky accused the Kremlin of stealing his Yukos oil empire with legal maneuvering. Khodorkovsky is being tried for fraud and tax evasion, and has been jailed for 14 months.