Directors of collapsed Babcock & Brown set to be dragged before public examinations

The liquidators of collapsed financial services company Babcock & Brown say they have been overwhelmed by the support from disgruntled creditors who have stumped up more than $300,000 to fund public examinations of the directors of the failed company.

Babcock & Brown collapsed in March after losing more than $5 billion in 2008. Creditors and noteholders subsequently voted to wind the company up in August.

Following that vote, liquidators David Lombe and Simon Cathro of Deloitte asked creditors to spend $400 each to fund an investigation into the company’s collapse, including the pair’s assertion that the company may have been insolvent by the end of November 2008.

Funds raised so far exceed $300,000, which will allow Lombe and Cathro to undertake preliminarily public examinations in court, possibly as early as November. It is expected Babcock founder Jim Babcock and former chief executive Phil Green will be part of the examinations.

“Clearly, creditors want action,” Lombe says. “In fact, some creditors have indicated they are prepared to contribute funds above the $400.

“In my 20 years of experience as a liquidator, I have not experienced this level of support by creditors; particularly as they are contributing money out of their own pockets after having already suffered significant financial losses.”

The Deloitte partners will continue their fundraising efforts in order to fund more detailed investigations.