The company said bondholders voted 76.9% in favour of the proposal, above the 75% threshhold required, which will see them relinquish significant rights and exchange the $137.3 million in principal and interest they're owed for a package with a net present value of $44 million with no certainty even that return can be achieved.

Blue Star's management and major shareholders had presented the refinancing package as bondholders' only hope of getting at least some of their money back and had said the only alternative was receivership.

However, after complaints from bondholders, who believed the restructuring deal was considerably more favourable to the shareholders than to the bondholders, the company made a number of concessions to sweeten the deal, including converting to equity a $12.7 million loan to the company from its major shareholders.

Director Tom Sturgess and Australian private equity firm CHAMP own 93.7% of Blue Star and under the original proposal would have earned 17.25% interest on the loan.

Managing director Chris Mitchell said the decision had been difficult for bondholders but the approval "means that a cloud has been lifted from the company. We now have the financial confidence to be able to move forward and deliver on our strategies."

Bondholders have given the company time to demonstrate it can deliver on its repositioning and restructuring plans to drive higher earnings, Mitchell said.

"Improved performance is the key to bondholders receiving some or all of their investment back."

The earliest the bondholders will receive anything is October 2013 when their first interest payment is due.