Greensill files for bankruptcy
Leading supply chain finance provider Greensill filed for creditor protection in London’s High Court after funding sources dried up and regulators moved to seize parts of its business.
Germany’s Financial Supervisory Authority, BaFin(Bundesanstalt für Finanzdienstleistungsaufsicht) has issued a ban on Greensill Bank AG on disposals and payments on grounds that there was an imminent risk that the bank will become over-indebted.
The problem commenced when Credit Suisse had suspended the $10 billion supply chain funds of parent company Greensill Capital which became uninsured after provider Tokio Marine refused to extend coverage. The lender is said to be planning to file for bankruptcy in the UK and sell its operations to Apollo Global Management Inc.
Greensill funded upfront payments to suppliers of its corporate clients by taking on the receivables. Credit Suisse’s funds purchased the receivables from Greensill on the condition that the SCF provider had an insurance policy in place. This expired on 1 March, which is when Credit Suisse froze the funds.
The press note of Credit Suisse mentions that in order to protect the interest of its investors ‘the Credit Suisse supply chain finance funds, Credit Suisse Asset Management fund boards have suspended the redemptions and subscriptions in these funds’.
Separately to Credit Suisse’s funds, Greensill Bank AG took deposits in Germany and provided SCF funding to Greensill Capital. On the regulatory side, BaFin had found that the bank was unable to provide evidence of the existence of receivables in its balance sheet that it had purchased from the GFG Alliance Group and due to this reason the regulatory had taken measures to ‘bank’s liquidity and to limit risks for Greensill Bank AG and has appointed a special representative for the bank’.
Over this, the regulator has also ordered that ‘the bank be closed for business with customers and prohibited it from accepting payments that are not intended for repaying debt to Greensill Bank AG’. However, the press release also noted that its ‘measures are immediately enforceable but not yet final’.
The total assets held by the banks amounted to approximately €4.5 billion as of 31 December 2020. The Australian company Greensill Capital Pty Ltd. is the parent company of Greensill Bank AG. Greensill Bank AG is directly supervised by BaFin, the press note states. The bank had got $1.5 billion under SoftBank Group Corp.’s Vision Fund in 2019, thus giving the bank the valuation of $4 billion. Greensill didn’t respond to a request for comment.