Greensill Agrees to $24 Million Sale of Finacity to Former Owner

Greensill Capital’s U.S. unit has agreed to sell its Finacity Corp. business to the head of the division for $24 million unless a higher bid comes in at a proposed bankruptcy auction.

Under the tentative deal, which must be approved by a judge, the U.S. unit would sell Finacity to its current president, Adrian Katz. In 2019, Katz and his family owned about 20% of Finacity when Greensill bought it, according to court papers filed Monday.

Under that deal, Katz agreed to accept about $21 million in deferred payments that were tied to Finacity’s annual revenue. To buy back the company, Katz has offered to pay $3 million in cash and forgive the $21 million he says he is owed, according to court papers.

Should U.S. Bankruptcy Judge Michael E. Wiles approve the proposed sale, Katz’s offer would be a so-called stalking horse bid at a potential auction. Should no other bids come in, a sale to Katz would become final.

Other potential bidders are in the process of signing non-disclosure agreements in order to get access to Finacity’s financial details, Greensill bankruptcy attorney Kyle Ortiz said during a court hearing held by telephone Wednesday.

Finacity helps firms manage their asset backed loans, acting as agent for financial transactions in 175 countries, according to court records.

Asset Value

Although Katz currently runs Finacity, Greensill argued in court papers that there is no conflict of interest in the sale. That’s because Katz isn’t an insider at Greensill, which is the seller. Because of his work at Finacity, Katz is in a strong position to know the company’s true value, Greensill argued.

Greensill filed for administration in the U.K. earlier in March, after the specialty finance firm collapsed when key backers walked away over concerns about the valuation of its assets. Greensill’s Australian holding company also entered bankruptcy protection earlier this month.

The American unit, Greensill Capital Inc., listed assets of as much as $50 million and liabilities of up to $100 million in its U.S. petition last week.

The subsidiary, headquartered in New York, sold Greensill’s products to customers in the Americas and passed its revenue directly to the parent company, court papers show. Most of the unit’s more than 70 employees were let go on March 17.

The case is Greensill Capital Inc., 21-10561, U.S. Bankruptcy Court for the Southern District of New York (Manhattan). To see the docket on Bloomberg Law, click here.

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