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. Last Updated: 07/27/2016

Court Rebuffs Yukos Receiver

A Dutch court on Wednesday ruled that Yukos receiver Eduard Rebgun did not have the right to sell off the firm's foreign assets in a bankruptcy auction in August, handing back control of Yukos' Dutch subsidiary to its former managers.

The ruling threatened to nullify the results of the controversial auction, which saw a group of U.S. investors scoop up the firm's foreign assets.

"The Russian bankruptcy of Yukos does not align with fundamental legal principles as accepted in the Netherlands," the Amsterdam court said in its ruling.

The court also said it refused to recognize bankruptcy manager Eduard Rebgun as the legitimate receiver of Yukos' Dutch subsidiary, Yukos Finance BV, reinstating former managers Bruce Misamore and David Godfrey. The ruling has immediate effect.

Rebgun oversaw a series of state-organized bankruptcy auctions earlier this year that sold off the remains of Yukos, once the country's largest oil company.

He could not be reached for comment Wednesday.

Most assets went to state-controlled Rosneft in a process decried by critics as lacking transparency.

In a surprise twist, Promneftstroi, a former Rosneft subsidiary bought by Moscow-based U.S. businessman Stephen Lynch, won the Aug. 15 auction for Yukos Finance organized by the Federal Property Fund. Lynch bought Promneftstroi days before the auction.

"We're studying the ruling, as we will study all the rulings we expect in this long court process," Lynch said.

Lynch, who owns real estate firm Monte Valle, was backed by a group of foreign investors, including Bob Foresman, vice chairman of Renaissance Capital, and Richard Deitz, president of U.S. hedge fund VR Capital and a former head of fixed income at Renaissance.

Deitz contacted Yukos' former managers and its main shareholder, GML, to seek their approval before going ahead with the auction.

Misamore, a former Yukos CFO, welcomed Wednesday's ruling. "It is gratifying that the Dutch courts offer stakeholders protection for their assets, which they obviously do not enjoy in Russia due to the complete lack of a similarly independent judiciary," he said in a statement.

Yukos Finance holds Yukos' foreign assets -- a 49 percent stake in Slovak pipeline monopoly Transpetrol, revenue from the sale of the Mazeikiu Nafta refinery in Lithuania, and Intelligent Energy, a London-based fuel cell technology firm.

Yukos was felled by over $30 billion in back tax claims, and former CEO Mikhail Khodorkovsky and his associate Platon Lebedev are currently midway through eight-year sentences on charges of fraud and tax evasion.

The Dutch court said in its ruling Wednesday that Yukos did not receive a fair trial to establish how much back tax it had to pay.

Yukos' former managers have mounted a series of legal challenges in Amsterdam and at the European Court of Human Rights in Strasbourg, France, to declare the entire Yukos bankruptcy illegal.

Lynch's Promneftstroi paid 7.8 billion rubles ($305 million) for Yukos Finance, well below the $2.7 billion value that former Yukos managers placed on the unit.

Lynch has said he was planning to sell the foreign assets to a third party. State-run Gazprom and Rosneft have denied that they are interested in buying the assets.

Rebgun can appeal the decision in the Amsterdam Court of Appeal.