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Babcock &Brown Ltd creditors invited to fund further investigations


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The creditors of Babcock & Brown Limited (BBL) have today voted for liquidation of the company, empowering liquidators David Lombe and Simon Cathro to further investigate matters surrounding the collapse of the company.

Key issues to be investigated

The report released on 13 August shows Mr Lombe and Mr Cathro are seeking to investigate the following matters:

  • potential conflicts of interest between the Boards of BBL and BBIPL
  • the possibility of inadequate disclosure regarding public offer documents
  • a review of the risk management processes and policies in relation to the business model
  • a review of the overall solvency of the group at various points and associated issues, and
  • an investigation of the timings of impairments of assets.

During the second creditors meetings held consecutively in Sydney and New Zealand today, Mr Lombe stated, “In particular, we are interested to further investigate a key question; At what stage did the BBL Directors have regard to the interests of the noteholders and creditors in making their decisions about the conduct of the group’s business?,” he said

Funding

Mr Lombe said that he believes that the creditors have just cause to pursue further investigations with a view to commencing recovery actions, however there are little funds available to pursue this course of action. As a result, the liquidators requested creditors and the 8,000 noteholders to contribute $400 each to self-fund further investigations and possible legal action.

“The contribution of the $400 in no way guarantees a return, so we suggest that noteholders and creditors should seek independent advice before deciding,” he said.

The closing date for contributions towards self-funding will be the 15 September 2009.

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

Returns and the claiming of Tax Losses

Currently the report estimates noteholder returns of 1.5cent in the dollar, however, further investigations will need to be made to establish if this return can be increased.
Other questions raised by creditors and noteholders centred around the claiming of tax losses, availability of Directors and Officers insurance, time frames for legal actions and chances of success.

Mr Lombe indicated that the first examinations are likely to be held in October/November, with initial findings likely to be released early next year.

At the meeting, creditors voted to appoint a committee of inspection to assist the liquidators going forward.

Mr Lombe also outlined the ability of the liquidators to make an application to court to vary contributories preferential ranking, which will allow those who contribute to funding of further action to receive a higher ranking in any resulting distributions.

Next steps

The next key date in the process will be the 15 September 2009, which is the closing date for litigation funding to be deposited by noteholders.

“After this date, we will fully consider all the options available to us based on the funds raised and wishes of the creditors and noteholders,” Mr Lombe finished.

Key dates in the Voluntary Administration of Babcock & Brown Limited

13 March 2009 Deloitte Corporate Reorganisation Group Partners David Lombe and Simon Cathro were appointed at Voluntary Administrators of Babcock & Brown Limited
25 March 2009 first meeting of creditors
8 April 2009 extension for convening period for the second creditors meeting from Federal Court of Australia
29 April 2009 resignation of directors
10 June 2009 Babcock & Brown Limited delisting announcement from the Australian and NZ Stock Exchanges and statement regard (tax options) released
17 June 2009 17 June likely delisting of ASX
24 June 2009 24 June likely delisting of NZX
13 August 2009 report to creditors (Voluntary Administrators 439A Report)
24 August 2009 second creditors meeting
15 September 2009 closing date for noteholder contributions to funding


Relevant website links:

The Deloitte Babcock & Brown Limited website
The Babcock & Brown Limited website information for subordinated noteholders and shareholders
ASIC information about the Voluntary Administration and Liquidation process

 

Last Updated: 

Contacts

Name:
Karina Randall
Company:
Deloitte Australia
Job Title:
Corporate Affairs & Communications
Phone:
Tel: + 61 2 9322 3778, Mobile: +61 414 823 712
Email
karandall@deloitte.com.au
Name:
Stewart Graham (Shareholder, noteholder and creditor enquiries only)
Company:
Deloitte Australia
Job Title:
Corporate Reorganisation Group
Phone:
Email
bandbltd@deloitte.com.au

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