Babcock & Brown is expected to know its fate as early as tomorrow.

Bankers are poised to approve a debt-for-equity swap, giving the company a lifeline to continue with its program of asset sales.

Some bankers have likened the recapitalisation as a multi-year wind down of the business as remaining property, leasing and infrastructure management businesses are sold off to recoup more than $3bn in debt.

Ahead of asset sales, bankers — led by struggling British giant HBOS — are likely to take an initial haircut on the debt, which will be rolled up into about $2bn worth of perpetual preference shares.

The Age