Babcock & Brown to be wound up

SYDNEY - Babcock & Brown's creditors have voted to wind up the company, empowering liquidators to probe further into the collapse of the investment firm.

Liquidators David Lombe and Simon Cathro had recommended the wind-up deal, which will return shareholders nothing and give noteholders about A1.5 cents in the dollar.

Creditors approved the plan yesterday at a meeting in Sydney, giving the liquidators powers to conduct public examinations and increased powers to commence recovery actions.

Lombe also asked creditors and noteholders to fund a new probe, saying he believed they had just cause to pursue further investigations.

He asked creditors and noteholders to contribute A$400 ($491) each.

Lombe confirmed he was also in discussions with a number of external litigation funders as an alternative funding source.

Lombe and Cathro plan to investigate concerns they raised last month over possible conflicts of interest between the boards of Babcock and Brown (BBL) and Babcock & Brown International, the main operating and asset-owning entity within the BBL group.

They propose to investigate potentially inadequate disclosure in public offer documents and whether BBL traded while insolvent from November 29, 2008.

Also on their list is to look into whether BBL may have adopted a high-risk business model and that the group's risk management systems may never have reached a point where they were "fit for purpose".

Debt-laden BBL was placed into voluntary administration on March 13 at the request of the BBL board, after a majority of some 8000 noteholders rejected a planned restructure of their debt.

- AAP