Servicos de Petroleo Constellation representative asks to close case

By Sarah Lizee

Olympia, Wash., Nov. 3 – Servicos de Petroleo Constellation SA foreign representative Andrew Childe asked the U.S. Bankruptcy Court for the Southern District of New York to close the company’s Chapter 15 case.

Childe also submitted a final report to the court.

In December 2019, some entities within the Constellation group effectuated a comprehensive financial restructuring through a Brazilian plan of reorganization, to which the New York bankruptcy court granted full force and effect within the United States.

But, after closing the transactions contemplated by the original plan, the Constellation group faced new and significant liquidity issues as a result of the Covid-19 pandemic and the depression of oil and gas prices, Childe said in court documents.

On April 7, 2021, a Brazilian court extended the duration of the company’s proceedings for one year to allow the debtors to propose an amendment to the original plan that would allow the debtors to right-size their capital structure and adapt to their new economic reality.

With that breathing room, the debtors were able to negotiate a comprehensive restructuring with their stakeholders, memorialized in an amendment to the original plan that was confirmed by the Brazilian court on March 28, 2022, Childe said.

Following the entry of the U.S. court’s order giving full force and effect to plan amendment on May 3, the amendment became effective on June 10.

Childe said the amendment provided for a substantial reduction of the Constellation group’s funded debt to about $826 million from roughly $1.84 billion and an exchange of some existing debt for reorganized equity in Constellation Oil Services Holdings, SA.

The amendment also contemplated $60 million of new money financing being provided to the Constellation group by new money lenders.

One entity within the Constellation group that is not subject to the Brazilian proceedings, Olinda Star Ltd., is currently seeking to effectuate a restructuring that mirrors the terms of the plan amendment in the British Virgin Islands, and the foreign representative of that proceeding has started a separate Chapter 15 proceeding in the New York court.

However, Childe said Servicos de Petroleo’s Chapter 15 cases have achieved the purpose for which they were started, and as such should be closed.

Servicos de Petroleo is a Rio de Janeiro-based offshore drilling company. The company filed Chapter 15 bankruptcy on Dec. 6, 2018 under case number 18-13952.

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