Now that the largest corporate bankruptcy in Latin American history is official, perceptions of whether it's handled fairly could have wide ramifications, helping or hindering investor interest in Brazil, South America's largest economy.
Eike Batista's energy company, OGX filed for protection from creditors Wednesday, creating a major test for Brazilian courts: The country's bankruptcy and restructuring regimes are relatively new—they became law only in 2005—and investors will watch to see how quickly the process moves and whether creditors are treated fairly.
As a source close to the OGX situation put it, "This is not a well-tested process."
Officially, OGX has filed for something called "judicial reorganization"—the closest Brazilian equivalent to U.S-style Chapter 11. While in the United States "bankruptcy" is a broad, more encompassing term, in Brazil, bankruptcy speaks exclusively to liquidation.