Based in london Green capital has filed for insolvency protection following the takeover of its banking services division by UK regulators and the freezing of its funds by the Credit Suisse Group, The Wall Street Journal reported.
Greensill’s lawyers appeared in a UK court on Monday March 8 and said the company is going through tough times and cannot pay its creditors. By filing for insolvency, Greensill is protected from legal action by creditors during its reorganization.
Greensill, which specializes in supply chain finance – where companies borrow to pay suppliers – was also crippled last week when its main insurer failed to renew a $ 4.6 billion contract. dollars and Credit Suisse frozen much of its funds.
Credit Suisse also demanded repayment of a $ 140 million loan, an amount that Greensill’s lawyers said it had no way of repaying. As Greensill was supported by SoftBank’s Vision Fund with $ 1.5 billion in 2019, the company’s filing could put SoftBank’s stake in danger of being wiped out. Greensill was once worth up to $ 4 billion.
Co-founded by Lex Greensill and Jason Austin, the company offered supply chain finance to businesses that were less likely to gain the attention of traditional banks. Last year, Greensill said it provided more than $ 143 billion in funding to more than 10 million customers.
As part of its insolvency process, Greensill will sell its core operations; the company is in talks with Apollo Global Management and its insurance subsidiary, Athene Holding. Greensill had has acquired several FinTech companies in the past 18 months, including Finacity Corp., Earnd and Omni Latam.
Swiss credit frozen $ 10 billion in investment funds last week that Greensill Capital used for supply chain finance. Among other things, the German financial services firm was concerned about Greensill’s exposure to British steel businessman Sanjeev Gupta.
The question remains whether by Greensill the problems were a one-time debacle or a sign of deeper problems in the supply chain finance industry. Some Greensill customers ended up defaulting due to their own issues, including starting construction Katerra, to which Greensill had provided funding of $ 435 million.