Moscow, August 2:

Yukos, the Russian Oil company, whose former owner dared to defy the Kremlin, was finally crushed yesterday as a court in Moscow declared it bankrupt and ordered its assets to be sold.

The Russian state-dominated companies Rosneft and Gazprom were circling last night, confirming their interest in a business expected to go for a knockdown price at auction. Rosneft and Gazprom are cash-rich, with the former having just raised $10.4 billion through a flotation on the London stock market and Gazprom reporting a doubling in first-half profits to 177.06 billion roubles (3.5 billion pounds) yesterday.

Moscow’s arbitration court upheld a vote by creditors to liquidate Yukos, which was once headed by the oligarch Mikhail Khodorkovsky, now serving eight years in a Siberian prison on politically tinged charges of fraud and tax evasion. Drew Holliner, a Yukos lawyer, called the ruling ‘a death sentence’ for the firm. Before his arrest in 2003, Khodorkovsky clash-ed with president Vladimir Putin over energy policy and provoked the leader’s ire by channelling funds to opposition parties. Yukos won plaudits from the west for good corporate governance but came under increasing scrutiny from the Kremlin and was presented with a series of multibillion-pound tax demands.

Before yesterday’s hearing the company had argued it could restructure itself and pay off its debts.