Greensill’s U.K. Creditors Set to Lose 80% After Firm’s Collapse
(Bloomberg) -- Creditors of Greensill Capital’s U.K. unit stand to lose about 80% of their claims tied to the supply-chain finance firm that imploded earlier this year, leaving more than 200 backers with a deficit of about $1.2 billion.
Grant Thornton, which in March was appointed as administrator of Greensill’s operations after the company filed for insolvency, expects to pay out $275 million of about $1.46 billion in claims to unsecured lenders known as non-preferential creditors, according to a report from the audit firm published on Friday.
The claims on Greensill’s U.K. unit include $500 million owed to a number of trade insurers including Tokio Marine Holdings Inc.’s Bond & Credit Co., Chubb Ltd., Swiss Re AG and Zurich Insurance Group AG, Grant Thornton’s document shows. Insurance broker Marsh & McLennan Cos Inc. has a claim of $37 million.
The collapse of the company founded by Lex Greensill has drawn intense scrutiny from Germany to Australia after the swift unraveling of the firm left investors facing several billion dollars in potential losses. The firm, which specialized in a form of short-term lending to companies, went from a small startup to a tech unicorn with an estimated $7 billion valuation at one point.
Along the way, Greensill attracted investors such as SoftBank Group Corp., brought on former U.K. Prime Minister David Cameron as adviser, and forged lucrative ties with global banks such as Credit Suisse Group AG. Greensill’s loss of trade credit insurance on many of its notes to less credit-worthy borrowers was one of the main factors in the company’s demise. Credit Suisse froze $10 billion of funds that bought Greensill’s notes after such a policy offered by Japanese insurer Tokio Marine lapsed.
Greensill obtained almost $3 billion of trade credit insurance through a syndicate of insurers led by Chubb in November last year, hoping that this could be used to replace the lapsed cover, according to witness testimony from the company’s founder. The policies were never used, however, as Greensill could not come up with cash collateral the policies demanded.
The U.K.’s Treasury Committee will hold evidence sessions next week with Lex Greensill and Cameron, it said on Twitter earlier on Friday.
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