Cleary Gottlieb Steen & Hamilton acted as counsel to the project finance lenders of Brazilian oil and gas driller Constellation Oil Services Holding, which was represented by White & Case, in a complicated $1.67 billion debt restructuring that spanned nearly two years.

Constellation's December 2018 bankruptcy filing made for one of Brazil's "largest and most complex bankruptcy filings" to date, said Cleary partner Richard Cooper. The prearranged filing under Brazilian bankruptcy law, as well as ancillary proceedings in the U.S. and British Virgin Islands, won support from all the project lenders as well as a majority of the company's unsecured creditors, including Brazilian financial group Banco Bradesco and bondholders.

With the support of its creditors, the company overcame a series of litigation challenges brought separately in three jurisdictions by a minority partner in a joint venture subsidiary and by a dissenting bondholder who ultimately dropped out of the ad hoc group of supporting bondholders.

The Cleary team was led by Cooper and São Paulo partner Francisco Cestero. New York partner Luke Barefoot advised on U.S. bankruptcy matters, while London partner Jim Ho provided advice with respect to U.K. law. Cleary Gottlieb attorneys also weighed in with advice on taxes, executive compensation and sanctions.

The White & Case team advising Constellation was led by partner Thomas MacWright in New York. Altogether, eight law firms worked on the restructuring, including Norton Rose Fulbright and Milbank.

The stakeholders put up more than $100 million in new money at closing Dec. 18, including a capital injection from the company's shareholders and a rights offering subscribed by existing bondholders. The restructuring afforded Constellation the capital and stability needed to continue to bid for contracts and maintain its rigs and operations.

The liquidity provided by project lenders while the restructuring proceedings were ongoing, meanwhile, enabled Constellation to continue operating and even secure new contracts during the proceedings.

Judge Martin Glenn granted the oil and gas group recognition in May, about nine months after it filed for Chapter 15 relief in U.S. Bankruptcy Court for the Southern District of New York. That concession came despite the judge having noted that Constellation's management and operations had become increasingly global and "detached" from any specific locale.

As counsel to the company's project lenders, Cleary said it helped guide a large and diverse set of financial and investment institutions to work together as a group. The project lenders are secured by different sets of collateral and include commercial banks, export credit agencies and institutional investors who purchased loans in the secondary market.

Cleary negotiated the terms of funding made available to the company from the project lenders' cash collateral. The firm also helped structure and facilitate the creditors' commitment to provide back-stop financing for the sale of designated company assets through a court-supervised auction process that took place during the bankruptcy proceedings.