MOSCOW (AFP) - The Yukos oil company, once Russia's largest oil producer, has been declared bankrupt by a Moscow commercial court despite a last-minute appeal by the firm's lawyers. "The court declares Yukos bankrupt and initiates liquidation of the company," judge Pavel Markov said Tuesday. The court also appointed Eduard Rebgun, who had been acting as administrator for the troubled oil giant, to oversee the receivership process. "All the assets will be sold," Rebgun told reporters after the court's decision. The ruling came at the request of creditors who included Russian tax authorities and the Rosneft oil company, after a majority of creditors rejected a rescue proposal from the Yukos management. "This is a death sentence for the company," said Drew Holiner, a Yukos lawyer, before adding that the group would appeal against the ruling. It spelled the end of a company which had become a virtual empire under ambitious former chief executive Mikhail Khodorkovsky, who is now languishing in a Siberian prison. The arrest of Khodorkovsky in 2003 and the subsequent dismembering of Yukos by Russian authorities has been seen as a defining episode in President Vladimir Putin's rule, a signal that post-Soviet Russia is ready to liberalise only within strict limits imposed by the centre. Commentators maintain that the Kremlin saw Khodorkovsky's influence as a challenge to its authority that could not be tolerated. Tuesday's hearing came after Rebgun said Yukos had debts of 18.26 billion dollars (14.38 billion euros), while its assets were worth only 17.72 billion dollars and that the company was therefore insolvent. Yukos' leadership-in-exile, many of whom fled Russia in 2004 fearing arrest, have disputed that claim. They argue that under present conditions, with world oil prices at record levels, the company's assets are worth far more than the administrator declared. Yukos continues to extract about half a million barrels of oil per day. Steven Theede, a US citizen who took over the helm after Khodorkovsky's arrest, slammed the bankruptcy proceedings earlier as a "sham", pointing to independent research suggesting that the company was worth about 30 billion dollars. Yukos' managers have vowed to continue a legal fight to block last month's initial public offering of the Rosneft oil company, which took over Yukos' main production arm as the company was being disassembled. On Monday, Russian Minister for Economic Development and Trade German Gref denied reports that the state energy behemoth Gazprom planned to take over Yukos' 20-percent-stake in the oil company Gazprom Neft, formerly the Sibneft company of tycoon Roman Abramovich. Yukos' fall from grace resulted from massive back tax claims against it that eventually amounted to 28 billion dollars, claims that the company had fought. Khodorkovsky, once Russia's richest man, was arrested by security officers who stormed his jet in the Siberian city of Novosibirsk in 2003. He was charged with tax evasion and embezzlement and was subsequently sentenced to eight years in jail. He is serving his sentence in a prison in the Siberian province of Chita, close to the Chinese border and the route of a planned oil pipeline that Yukos wanted to build to China. The Yukos case contributed to a cooling of relations between Moscow and the West after critics viewed it as Kremlin-driven retaliation against the company for becoming too independent and for Khodorkovsky's political activities. Washington has frequently said that the case indicated weaknesses in the rule of law in Russia. Although Russia's oil-driven economy continues to grow, analysts say the case had a chilling effect on the still relatively modest levels of foreign direct investment.