Moscow Court Hands Sibir Energy "Important Victory"

MOSCOW. (Interfax)- Britain's Sibir Energy recorded an "important victory" on August 9 when the Moscow Arbitration Court rejected an appeal by Sibneft against an April ruling that placed OAO Yugraneft under external administration in connection with the company's bankruptcy.

Sibir Energy said in a press release that an appellate court had already upheld the April ruling in June. The court ruled in favor of Sibir Energy's position that the introduction of external administration to Yugraneft is legal and that there is no basis for initiating liquidation proceedings against the company.

"This ruling is an important victory for Sibir Energy because it will allow us to keep the external administrator in place. Sibneft is trying to escape responsibility for its illegal dilution of Yugraneft's stake in Sibneft Yugra by liquidating the company instead of allowing an external administrator to return it to financial health," said Sibir Energy CEO Henry Cameron in a statement on August 9.

Sibneft has repeatedly sought to use bankruptcy proceedings as a means of liquidating Yugraneft, the release said. Sibir Energy's legal counsel, Dmitry Afanasyev at EPAM, commented: "No bona fide creditor would attempt to liquidate a company that has virtually no assets available to sell, particularly when that company is in the process of recovering assets that would allow it to return to financial solvency. We are pleased that the Russian courts agree with our position."

"Sibir Energy will continue to fight in Russian and international courts for the return of the Sibneft Yugra assets that were misappropriated by Sibneft," he added. As reported earlier, Yugraneft creditors on August 1 voted to ask Moscow Arbitration Court to dismiss the company's bankruptcy administrator, Mikhail Kotov, an Interfax correspondent reported from the creditors meeting.

Candidates to replace Kotov are to be put forward by the self-regulating non-commercial organization- Interregional Experts and Professional Managers Center. Representatives from Sibneft and companies affiliated to it and a representative from Britain's Sibir Energy attended the meeting.

Sibir Energy refused to take part in the meeting and the company representative said the meeting did not hold any authority because Sibir Energy information has the official meeting down for August 9 at 7:30 p.m., Moscow time.The meeting was called for August 9 and this is in line with
legislation as the meeting should be set for no less than three weeks after the bankruptcy administrator receives creditors' requests. The request was obtained on July 19 and the meeting was set for exactly in three weeks- August 3. In addition, our notary was not allowed in to
the August 9 meeting, the representative said.

Sibneft said that as its representatives were not allowed in to the creditors meeting on July 19, they, as holders of the majority of votes, had the right to set the meeting. Sibir Energy was notified of the meeting and that is why they are here.

A preliminary list of participants was put together and if the Sibir Energy notary was not allowed into the building it means he just was not on the list, a Sibneft spokesman said. The Yugraneft creditors meeting was acknowledged as invalid because it did not reach quorum.

During the meeting, a three-member creditors committee was selected and the committee's authority was confirmed, including the taking of all decisions laid out in the law on bankruptcy. Creditors also voted to replace Igor Serebryakov as the head of the creditors committee with Viktorio Daudrikh.

The entire Sibneft vote of 63.32% approved all items on the meeting's agenda. The Yugraneft creditors meeting on July 19 was invalidated because Sibneft officials were not allowed into the building where the meeting was to take place. Creditors are claiming 1.2 billion rubles from Yugraneft. Sibneft claims account for about 64% of Yugraneft payables and Sibir Energy- around 36%.