"Massive" debts brings down Australian investment bank

13 March 2009

Babcock & Brown, Australia's second-biggest investment bank, has been placed in administration with "massive" debt levels, according to reports.

An 11th-hour bid to avoid administration failed when a group of shareholders from New Zealand voted down a plan to restructure the terms of its debt.

David Lacombe and Simon Cathro of Deloitte have been appointed as the investment bank's voluntary administrators.

Under Australia's bankruptcy laws, Babcock & Brown will be allowed to attempt to continue trading in a bid to stay afloat.

A statement from the company said: "[Babcock & Brown] will continue to operate and will proceed with the orderly realization of assets over an approximate two to three-year time horizon to reduce debt."

However, the BBC reports that Mr Lacombe told the Australian Broadcasting Corporation that it is too early to say if the company can avoid a total collapse.

The news agency added that Babcock & Brown has been under pressure for over a year after being unable to handle its "massive" debt levels because of the credit crunch. The company's shares were suspended three months ago having fallen from a peak of A$37 ($24) to 32.5 cents each.

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