With the Babcock & Brown saga looking like it could drag on until the end of next year after a $150 million stay of execution delivered by its bankers, it’s worth revisiting some of the more glowing assessments of Babcock’s future and the cult of personality attached to ex-chief executive Phil Green.

The latest deal will give Babcock extra time to dispose of assets to pay off $3.25 billion in debts but with asset prices collapsing, the prospect of the firm returning to prosperity is virtually nil. Green’s old firm is now running on debtor-in-possession finance, but he’s refusing to exit quietly and could be angling to join a private equity buyout. Some reports suggest Green still reckons he’s the best person to run the business. This inexplicable $220 million share placement at $13.65 on March 26 was perhaps the height of folly and with asset prices unlikely to recover any time soon, Babcock has now entered the corporate graveyard.

The idea that individual wizardry can somehow overcome debt-heavy business models amid the global financial crisis has a long pedigree. Until the bitter end, Eddy Groves still maintained his insider knowledge could somehow tame amorphous and abstracted global financial flows and fix his business. 

Groves and Green presided over an opaque set of accounts and repeatedly tried to spin their way free in the media as storm clouds gathered. Take this Business Spectator KGB Interrogation with Green from March:

I think our senior management team have been doing a really good job of running this business. In the second half of last year when the market was saying ‘you guys can’t deliver, you’ve got no chance of delivering’, we outperformed expectations. Okay? We’ve never underperformed our guidance.

But the market thinks that they can do a better job of running our business than we can.

But the cracks in the Babcock model have been brewing for years as this story from 2005 demonstrates. When Green released the 2007 full-year results on 21 February some commentators were still hanging on:

For myself, a long-time critic of the financial engineers, this result suggests that on a long-term basis it would appear the two sector leaders Babcock and Macquarie are out of the woods. — Michael West, Sydney Morning Herald.

When Babcock struck a new deal with its bankers in July, they were still buying Green’s line. If the US government thought Citigroup was ‘too big to fail’ then Phil Green was apparently too suave:

This is a huge victory for Green: he is, like Bobby Ewing, back in the land of the living, and has the chance to relegate the market plunge that pushed Babcock to the brink to bad-dream status. — Malcolm Maiden, The Age

And Babcock spinner Kelly Hibbins’ valiant efforts are also worth a re-read, in light of what was really unfolding behind the scenes — after the Babcock share price slumped 90%, Green sacked himself, first as CEO in August, and then as a non-executive director in September as the situation became terminal.