BABCOCK & Brown has been slapped with a $113.1 million claim by...

BABCOCK & Brown has been slapped with a $113.1 million claim by nearly 600 shareholders of the collapsed investment bank in a move that could see clawback provisions strip noteholders of some of their meagre payout.
The 597 investors are seeking to be deemed unsecured creditors, which would see them rank ahead of the subordinated noteholders who have already received a payout of about $6m.
Clawback provisions, while understood to be unlikely, could also come out of the claim against the company, which is now in liquidation.
So far no equity holders to Babcock & Brown have been admitted as creditors to the group, which was once worth more than $4 billion before its collapse in March 2009. The claim relies on a High Court ruling on the 2004 collapse of gold producer Sons of Gwalia that found shareholders could become creditors to a collapsed company if it could be shown they were misled by the company into buying shares.
The head of litigation funder Bookarelli, Paul Riik, who previously worked at DC Legal, which ran a series of class actions, including that for Sons of Gwalia, said he was confident the claim would succeed.
“We believe the shareholders were misled and their status should be elevated,” Mr Riik said. “We are not after 100c in the dollar, what we’re after is a reasonable cents-in-the-dollar amount.’’
The shareholders’ claim centres on an allegation by liquidator David Lombe at Deloitte that the company was trading while insolvent from November 2008 — six months before the group called in administrators. The claim relates to shareholders who bought shares during November 2008 or after.
Mr Lombe decided not to pursue those claims after brokering a settlement with the company’s directors, including on behalf of subordinated noteholders to the company, following public examinations.
However, Mr Riik believed Mr Lombe’s opinion Babcock & Brown was trading while insolvent ahead of its collapse would further their case.
The push by the shareholders follows two earlier requests from Bookarelli on behalf of two separate tranches of investors to be listed as creditors to the headstock of the collapsed company. Those two claims cover 178 shareholders and total $27m.
Deloitte has rejected all three claims, leaving it for shareholders to appeal against the decision in the Federal Court. The first claim by 78 shareholders for $12.1m was heard by the Federal Court in July and is awaiting judgment.
“As liquidator I have carefully considered the claims that have been lodged with me and, based on queens counsel and my solicitor’s advice, all the claims have been rejected,” Mr Lombe told The Australian.
“In relation to the insolvency matter, the matter is before the court and I am awaiting the decision in that regard.
“It was agreed between the parties to delay the determination of these proofs of debt until the outcome of the present preceding is known.”