The Bankruptcy Files: Brazil's Batista a Boon to Big Firms
Brazil might be the target of industrial espionage—thanks to the reported activities of the National Security Agency—but the South American nation is also attracting the interest of Am Law 100 firms drawn to the crumbling empire of Brazilian billionaire Eike Batista.
Bloomberg reported last week that Batista, once a symbol of Brazil’s growing economic prowess, had retained Quinn Emanuel Urquhart & Sullivan to represent him after his oil company OGX Petroleo e Gas Participacoes defaulted earlier this month on a $44.5 million interest payment, triggering a 30-day period to negotiate with bondholders.
Susheel Kirpalani, who left Milbank, Tweed, Hadley & McCloy in 2007 to start Quinn Emanuel’s bankruptcy litigation practice, and complex litigation head Michael Carlinsky, another high-profile Quinn Emanuel lateral hire, are advising Batista along with bankruptcy partner Benjamin Finestone.
Davis Polk & Wardwell and Eduardo Munhoz, a restructuring partner with Brazil’s Mattos Filho, Veiga Filho, Marrey Jr, are advising OGX on its discussions over a possible restructuring of $500 million in bonds. Bloomberg has reported that Bingham McCutchen, Cleary Gottlieb Steen & Hamilton, and Pinheiro Neto—another leading Brazilian firm—are advising creditors.
This week, OGX dismissed two top executives, CEO Luiz Carneiro and chief legal officer Jose Roberto Faveret, according to sibling publication Corporate Counsel. Darwin Correa, an attorney with Paulo Cezar Pinheiro Carneiro in Rio de Janeiro, will replace Faveret as OGX’s top in-house lawyer.
OGX, which is reportedly mulling a potential bankruptcy filing in Rio de Janeiro, earlier this year turned to Herbert Smith Freehills for counsel on its $850 million sale of a 40 percent stake in two Brazilian offshore oil exploration blocks to Malaysia’s Petronas, according to sibling publication The Asian Lawyer.
Batista also relinquished control this summer of his natural gas and electricity company MPX, which is saddled with over $3 billion in debt, and in August sold a controlling stake in his LLX logistics firm for $560 million to EIG Global Energy Partners. (The Latin Lawyer reported in August that Batista’s financial pain has been the economic gain of many outside firms.)
Brazilian securities regulators opened a formal inquiry into Batista in September, as the country’s political establishment has resisted the urge to bail out the embattled billionaire, in part due to recent street protests and other societal unrest related to widespread economic disparity in the nation, which is the world’s fifth-largest by both population and land mass.
Below are some of the other recent Chapter 11 filings and their lawyers of note. As usual, hourly billing rates are in parentheses, when available.
Fresh & Easy Neighborhood Market
Seeking to complete a $126 million sale to billionaire Ronald Burkle’s Yucaipa Companies, grocery chain Fresh & Easy filed for bankruptcy in Delaware on September 30. The U.S. arm of struggling U.K. supermarket giant Tesco, Fresh & Easy couldn’t find success stateside, and now its 199 stores will be folded into Burkle’s grocery empire.
Lisa Laukitis, a Jones Day bankruptcy partner who joined the firm in 2009 with several colleagues from Kirkland & Ellis, and partner Paul Leake are leading a Jones Day team advising El Segundo, California–based Fresh & Easy. A declaration by Laukitis states that although Jones Day has done work for Yucaipa in the past, the firm is not conflicted in its role for Fresh & Easy in its Chapter 11 case.
A copy of the firm’s engagement letter shows that Fresh & Easy has waived any potential conflict and that Jones Day will be paid a $750,000 retainer for its services. Another filing by Laukitis states that the firm has drawn down that retainer and received an additional $657,044.