OGX, the Brazilian oil company controlled by former billionaire Eike Batista, sought court protection from creditors on Wednesday in Latin America's largest-ever corporate bankruptcy filing.
The bankruptcy protection request, which was confirmed by the court in Rio de Janeiro, came after OGX failed to reach an agreement with creditors to renegotiate part of its $5.1 billion debt load.
It also is another chapter in the unraveling of Batista's once high-flying industrial empire, which he has been dismantling in recent months after disappointing output from offshore OGX wells set off a crisis of investor confidence.
If the court approves the request, OGX will have 60 days to come up with a corporate restructuring plan. The company's creditors, which include the California-based bond fund Pacific Investment Management Co (Pimco), and U.S.-based investment fund BlackRock, will then have 30 days to endorse or reject the plan.
Officials at OGX and EBX, Batista's holding company, did not immediately respond to telephone calls and emails seeking comment.
(Read more: The downfall of a $30 billion tycoon)
An OGX bankruptcy is unlikely to have a significant effect on Brazil's economy. The company is barely out of its start-up phase and produces almost no crude oil, and most if its debt is held by foreign bondholders. But the fate of sister company OSX Brasil depends almost entirely on OGX, whose market value has plummeted by nearly $45 billion since its stock peaked in October 2010.
Batista created OSX, which had to scale back efforts to construct the largest shipyard in the Southern Hemisphere, to build and lease oil production and service vessels to OGX.
A renowned dealmaker who once boasted he was on track to become the world's richest man, 56-year-old Batista has seen his personal fortune reduced by over $30 billion in the last 18 months as investors punished the share price of his listed companies.
The downward spiral forced Batista to start breaking up his Grupo EBX conglomerate, which also included a port operator, mining and energy interests, and an entertainment company.
Batista's rapid decline has become a symbol of Brazil's own economic troubles. After a decade-long boom in which investors poured cash into Brazil and Batista's enterprises, Latin America's largest economy has been in a rut for nearly three years, frustrating predictions that the country was poised to join the ranks of developed nations.
OGX's decision to seek protection from creditors came as no surprise. After missing a $44.5 million interest payment owed to bondholders on Oct. 1, OGX scrambled to restructure its debt before the end of a 30-day grace period or be declared in default on $3.6 billion in bonds.
The process was rocky from the outset, and OGX called off the talks with creditors on Tuesday, leaving a bankruptcy filing as the only viable option to buy more time in its quest to save the company.