Yukos Creditors Accessing the Assets of Yukos Finance: The 474g Claims

Prior to the bankruptcy, a number of creditors of Yukos Oil Company attempted to enforce their claims against the shares held by Yukos Oil Company in Yukos Finance.

Specifically, Yukos had two creditors that had claims that are enforceable in the Netherlands: Moravel, and Rosneft.

As discussed previously, Moravel was an indirect subsidiary of the majority shareholder of Yukos, Group Menetap Limited (GML). Moravel had a claim on Yukos Oil in relation to a loan that was provided by Société Générale to Yukos under the loan agreement of 30 September 2003. Pursuant to a guarantee, Moravel took over the position of Société Générale on 25 May 2004. (This is discussed in section 1, above).

The second claim was previously owned by a consortium of banks. For this claim, in June 2005, the banks made a pre-judgment attachment on the Yukos Finance shares, which could be converted into an executory attachment as soon as the banks obtained a title enforceable in the Netherlands (which they did a few weeks later). On 13 December 2005 these banks entered into an agreement with the Russian state enterprise Rosneft, under which they sold their claim against Yukos to Rosneft. (As discussed previously, in section 1, this agreement included a commitment that the banks petition for the bankruptcy of Yukos in Russia prior to the assignment of the claim). Rosneft then succeeded the banks also in the attachment on the Yukos Finance shares and the following proceedings.

Moravel is obviously (unlike Rosneft) not a Russian state controlled (nor Russian state sympathetic) company. Not surprisingly, Moravel's claim was not recognised in Russia at the meeting of creditors in the substitution procedure on 20 and 25 July 2006. Nor was the claim recognised in the bankruptcy.

However, prior to the bankruptcy, on 21 April 2005, Moravel levied a prejudgment attachment for its loan on Yukos' shares in Yukos Finance, for an amount of US$910,000,000, including interest and costs. Moravel subsequently obtained an arbitral award for this claim in the London Court of International Arbitration (LCIA) on 16 September 2005. In this decision, Yukos was ordered to pay to Moravel the outstanding amount due.

In addition to this, on 24 November 2005, the Amsterdam District Court granted a request for enforcement of the LCIA arbitral award. With this, Moravel obtained valid title of enforcement in the Netherlands for its claim and its pre-judgment attachment was converted into an executory attachment. This means, in short, that Moravel was entitled to a share of the proceeds from any sale of the shares of Yukos Finance.

Pursuant to Article 474g of the DCCP, a party that has an executory attachment on shares must file a request with the Dutch courts in which it asks the court to set the manner and conditions of sale of those shares. Both the banks, later succeeded in the proceedings by Rosneft, and Moravel filed requests pursuant to Article 474g DCCP. The court rendered a number of interim decisions, and then in December 2007, ordered the public auction of the Yukos Finance shares.

As described above, by October 2007 Rosneft had received full payment of all of its existing and non existing claims on Yukos Oil (in fact, according to statements published on its website, it had made a book profit on its Yukos Oil claims of nearly USD$ 10 billion). Subsequently, the Dutch Yukos entities requested the court to lift all of Rosneft's attachments on any of the Dutch Yukos assets, including the attachments Rosneft had acquired from the banks (concerning the banks loan) and the attachment made for payment of its alleged claim based on the Commission Agreement between YNG and Yukos. Finding that Rosneft no longer had a claim for which those attachments served as security, the Dutch court lifted all Rosneft's attachments by decision of 6 March 2008. Rosneft appealed, but the decision was confirmed by the Amsterdam Court of Appeals, which by decision of 25 November 2008 found that Rosneft had been overpaid by at least USD$ 150 million in the Russian bankruptcy.

The lifting of the Rosneft attachments, made it possible for Yukos International to pay the money owed by Yukos Oil to Moravel so as to prevent the executory sale of the shares in Yukos Finance, as ordered in the 474g proceedings. For this payment, Yukos International requested the court's permission, which was also given in the 6 March 2008 decision.

Following the lifting of the Rosneft attachments, and the payment of the Moravel claim, the 474g proceedings were terminated and thus the auction of the Yukos Finance shares was avoided.