A Moscow court has declared OAO Yukos, once Russia’s largest oil producer, bankrupt as company lawyers appealed the decision handed out on Tuesday.

Yukos, once headed by former chief executive Mikhail Khodorkovsky, faced mounting tax bills after the Russian government imposed a $28 billion burden on the company. This was after Khodorkovsky was found guilty by a Russian court for tax evasion and embezzlement.

The decision came after Yukos’ creditors including, the Russian tax authorities and the Rosneft oil company voted to bankrupt the company.

The liabilities for the Russian firm were $18.26 billion while its assets were worth $17.72..

“The court declares Yukos bankrupt and initiates liquidation of the company,” Judge Pavel Markov said. An administrator was assigned to oversee the liquidation process. A warning was issued that all company assets would be sold.

Steven Theede, who took over after Khodorkovsky's arrest, described the court proceeding as a ‘sham,’ saying that independent research had valued the company at about $30 billion.

Relations between Moscow and the West chilled after the arrest of Khodorkovsky, with many viewing the arrest as a move to silence opposition to Russian President Vladimir Putin’s increasingly autocratic grip on Russia.