Management and its banks sought the advise of two of Sydneys top notch insolvency firms.....prior to putting the arrangemnt into place..... (whereby the head operating company BNB would fall into administration & "international" would continue to operate the B & B business.)
Critical to company Directors, in seeking this advice....was that "international" would not be trading insolvent.....whereas banks may have had an agenda to look at extracting a little more... (20% PA fee )over and above their loan and interest repayment. (refer to CEO Larkin interview previously posted)
Where do thing stand...some 4 months later, and still a couple of months out from the administrators report.
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Certainly complex stuff, which the administrators say will cost BNB creditors just under $1 million to investigate.
Obviously near impossible, even to try to summarise in one page on a chatline.....but some points which are just my views:
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Remember that 13th March explanatory memorandum presented to noteholders (the one whereby the company wanted noteholders to accept 10 cents out of their $100 face value notes).
Well I think there is some most interesting information, presented in the memorandum.... which may be closely looked at during any court proceedings.
Just look at some of the comments on page 10 & 11...bearing in mind this info came from the company....and the significance of BBIPL possibily trading insolvent.
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*NOTE BELOW*
"....which will rank ahead of payments OWED by BBIPL to BNB...."
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"The Directors expect their will be no return to noteholders...."
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"The BBIPL Loans are effectively the sole source of funds by which BNB services the interest payments on the Notes .."
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* Especially NOTE this comment made by the company.....from above.
"...which will rank ahead of payments OWED by BBIPL to BNB.."
There you go....comment means, BBIPL owe the noteholders now. Stakeholders have not/are not going to be paid.
How can BBIPL still be trading under Australian Corporations Insolvency Law?
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Therefore it would seem clear from the Memorandum document....that the operating arm ie BBIPL right now owns BNB noteholders full payout of the $600m liability.
The possibility of trading insolvent (and subsequent declaration of administration/liquidation of BBIPL)....has very significant breach of Corporations Law consequences for all stakeholders.
The noteholders are the sole creditors of BNB.....should BBIPL be trading insolvent now.....noteholders would seek compensation from Directors, their insurers and claw back preferential payments.
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Trading insolvent is one avenue, typically an administrator looks at, to seek compensation for creditors.....this situation is a little differnt here for me.
It is the absolute outrage and indeed disgrace for the banks here to demand a 20% pa fee over and above the repayment of the loans......which fairness decency and common sense should not be allowed. Such a fee totally shuts out bond holders.
Indeed basically Babcock and Brown is still operating as before.....with the possibility, upon improving econimic conditions... the banks will reap huge profits from their equity injection into the group over past years.
BNB
babcock & brown limited
