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U.S. Bankruptcy Court OKs $93 Mln Pact Between Getty, Lukoil

July 29, 2013 | By Nick Brown | Reuters

A bankruptcy judge on Monday signed off on a deal for Russian oil giant Lukoil to pay $93 million to its former Getty Petroleum Marketing Inc unit to resolve a trial over Getty's collapse.

Judge Shelley Chapman approved the settlement at a hearing in U.S. Bankruptcy Court in Manhattan, Abid Qureshi, a lawyer for Lukoil, told Retuers.

Getty, a gas station operator, declared bankruptcy in December 2011, eventually appointing a trustee, Alfred Giuliano, to liquidate its assets and pay back creditors.

A key piece of Giuliano's strategy was to sue Lukoil, saying the company stripped Getty of its best gas stations and exacerbated its insolvency. The sides reached a settlement earlier this month, halting a trial of 17 days of testimony.

Giuliano alleged that Lukoil moved Getty's most profitable stations to another subsidiary in 2009 in exchange for $120 million, far less than what Getty felt the assets were worth. Under the settlement, Lukoil will pay the Getty estate an extra $93 million, resolving both the trial and a separate dispute between the parties over the allocation of tax benefits, court documents show.

The trial was unique in that most of it was held behind closed doors, a rarity in bankruptcy court, which puts a premium on transparency.

During the 2009 transaction at the center of the dispute, Lukoil's lawyers at Akin, Gump, Strauss, Hauer & Feld represented both the buyer and seller because, at the time, Getty and Lukoil were part of the same corporate family.

Because Akin was on both sides of the deal, the parties in the trial had access to information that would normally be kept confidential due to attorney-client privilege. That information was fair game in the trial, but still not fit for the public.

The uncharacteristic sealing led to logistical issues in managing the case, including the accidental release of sealed transcripts.

Asked last month by Reuters for transcripts for all dates that were public, Veritext LLC, a court transcription company, supplied transcripts that included four days of trial that the court later told Veritext should have been sealed.

In a statement, Veritext said "the transcripts were sent in accordence with standard bankruptcy court procedure" but did not elaborate.

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