At the same time, Mr. Theede said the YUKOS Board of Directors would not recommend that shareholders declare the company bankrupt. The YUKOS CEO stressed that the company’s management was doing everything possible to solve the problem. In particular, Mr. Theede suggested that the Russian government nominate candidates for the YUKOS Board of Directors.

On November 2, the YUKOS Board of Directors decided to call an emergency general meeting to consider whether the company should file for bankruptcy or be liquidated. The decision was prompted by new tax claims against the company and its key production subsidiary Yuganskneftegaz for 2001-2002. The Board of Directors also decided to call a general meeting on January 13, 2005, to consider the dissolution of the Board of Directors and the election of a new Board.

Earlier on Tuesday, YUKOS Chief Financial Officer Bruce Misamore said the company and its subsidiaries were facing tax claims of $18.4bn for 2000-2002. According to him, the company has already paid $3.9bn. YUKOS said its net loss in January-September 2004 was RUR 182.696bn (about $6.37bn according to the current exchange rate), against a net profit of RUR 22.718bn in the same period last year.

According to the Gazeta newspaper, YUKOS is making another step towards bankruptcy. The company’s report for January-September showed that its debts exceed its assets, which formally allowed YUKOS to file for bankruptcy.

Bankruptcy would be beneficial to YUKOS owners. Indeed, this would help shareholders retain part of their property. If the company is declared bankrupt, transactions with its property will be frozen, and the government will not be able to sell Yuganskneftegaz, YUKOS’s main production subsidiary. Employees would be first in line to get money from the bankrupt company. They would be followed by the company’s creditors, while the state would be the last in line.

However, shareholders’ hopes to retain at least part of their property through bankruptcy are unlikely to be realized, the Gazeta newspaper reports. According to experts, the government controls the largest part of YUKOS’s debts, which would give the government the largest number of seats on the committee of creditors and appoint its temporary administrator. So, the government would reserve the right to control YUKOS assets and sell them as it sees fit, the newspaper concludes.