Former Babcock & Brown chairman Elizabeth Nosworthy had questioned the performance of the investment bank's ex-boss Phil Green ahead of the company's demise.

As a witness to a liquidators' hearing in the Sydney federal court this morning, Ms Nosworthy said she had talked with her predecessor Jim Babcock about Mr Green's performance.

''There's no doubt that Phil was extremely upset and concerned at what had happened, she said. ''There's no doubt that Phil was concerned about what had happened to shareholders and investors.''

''To some extent I would say his performance was not as it had been, but under the circumstances I don't think any CEO would have done any better,'' said Ms Nosworthy.

According to Ms Nosworthy, she and Mr Babcock agreed Mr Green should leave the investment bank. His resignation was done very amicably, she said.

Liquidators are conducting hearings into the $3 billion demise of Babcock and Brown last year, focusing on late 2007 to August 2008 period, when the global credit crunch unfolded and the company's share price was hammered. Mr Green left the bank in August 2008. Babcock and Brown collapsed in March 2009.

''It's fair to say Jim Babcock and I spoke to Phil about what we had heard and the feedback we had had from the market,'' Ms Nosworthy said.

''Phil is a very decent and honorable man. He felt bad about it. Anything he could do to help or assist the company, he would do,'' she said.

''The issue was a question of market confidence.''