Finance house Greensill Capital’s Australian arm traded while insolvent, according to a report by the company’s liquidators. It means directors, including company founder Lex Greensill, may be liable for debts incurred during this period.
The liquidators, led by Grant Thornton partner Matt Byrnes, determined that Greensill Capital likely became insolvent on or around March 2, 2021 when the company failed to renew its trade credit insurance and was therefore unable to originate new assets. The company did not go into administration until March 8.
The report says that it may be the company was insolvent earlier than this as it was reliant on Greensill’s UK operations for its funding on an as-need basis.
“As the role of GCUK (Greensill Capital UK) was critical to the company’s solvency, in particular the ongoing availability of funding provided to the company to allow it to meet its obligations, our final conclusions as to the solvency of the company will be dependent in part on the outcome of the GCUK administrators’ investigations, which are yet to be finalised,” the report said.
The majority of the administration process is being conducted in the UK by a separate team from Grant Thornton’s London office. The Australian entity is the parent company for the Greensill Group but it only provides administration and head office support to the group with GCUK as the major operating company.
Greensill’s main asset is a $US777.4 million ($1 billion) debt owed by GCUK but creditor claims exceed $4.9 billion with most of it owed to German banks which have so far paid out €2.1 billion ($3.36 billion) to their creditors.
The report said the liquidators had not identified any transactions that would likely give rise to an uncommercial transaction, which the liquidators could overturn, or identified any unfair preference payments or unfair loans as part of their investigations so far.
Greensill, which specialises in a controversial service known as supply chain financing, collapsed after its key backer Credit Suisse withdrew financial support after Greensill’s Australian insurers at Insurance Australian Group refused to renew insurance over $10 billion of trade credit. Greensill’s fallout has also seen its German-registered bank Greensill Bank hit with criminal charges by Germany’s corporate regulator BaFin and revelations local councils around Germany were exposed to Greensill.