OGX borrowed against oil it hadn't produced — and became Brazil's biggest bankruptcy

OGX was the oil company at the centre of Eike Batista's EBX empire, and for a while it was the symbol of Brazil's offshore oil boom. Batista, briefly counted by Forbes as one of the richest people in the world, raised billions from investors on the promise of vast offshore reserves. At its height the company was among the most valuable private firms in Brazil.

The business model, as analysts later described it, was built on securing loans to be paid back with oil that had not yet been produced. The wells disappointed: OGX suffered poor output from its Brazilian fields and repeatedly missed the production targets its valuation depended on. Reality, in the BBC's words, did not live up to the exaggerated expectations Batista had created.

The end came quickly. In October 2013 OGX missed a $44.5 million interest payment to bondholders, and when creditor talks failed it filed for bankruptcy protection in a Rio de Janeiro court on 30 October 2013, carrying about $5.1 billion of debt. It was believed to be Brazil's biggest corporate bankruptcy, and at the time Latin America's largest corporate default.

OGX's collapse brought down the rest of the empire — steel, mining, infrastructure and property companies built on the same borrowed expectations — and all but wiped out a personal fortune Forbes had estimated at $30 billion only a year earlier. It is the textbook case of a valuation financed by debt and underwritten by resources that were never actually extracted.