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Greensill Capital files for insolvency; Is SoftBank’s stake reportedly at risk?

Greensill Capital

Greensill Capital, a provider of structured working capital financing to businesses globally, has filed for insolvency. Notably, the UK company was crippled after its main insurer refused to renew a $4.6 billion (approx £3.3 billion) contract and Credit Suisse also froze $10 billion (approx £7.2 billion) of funds linked to the firm.

Severe financial distress

The Swiss bank Credit Suisse also asked the company to repay the $140 million (approx £100 billion) loan as well. According to Greensill’s lawyers, the London-based company has fallen into “severe financial distress” and is finding it difficult to pay its debts. 

By filing for insolvency, Greensill is protected from legal action by creditors while it reorganises. According to the report, US investor Apollo Global is planning to buy parts of Greensill’s ailing business for $59.5 million (approx £43 million) cash. It includes the company’s intellectual property and IT systems including, a majority of the more than 500 employees. 

SoftBank stake at risk

In 2019, SoftBank’s Vision Fund invested $1.5 billion in 2019 and now Softbank’s stake is reportedly at risk of being completely wiped out. In 2020, it issued over $143 billion (approx £103 billion) in finance to over 10 million customers.

On their official website, “Chris Laverty, Trevor O’Sullivan, and Will Stagg of Grant Thornton UK LLP were appointed as joint administrators of Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited on 8 March 2021 (the Joint Administrators).

The Joint Administrators are in continued discussion with an interested party in relation to the purchase of certain Greensill Capital assets. As these discussions remain ongoing, it would be inappropriate to comment further at this time. 

Following these appointments, the directors of Greensill Capital Pty Ltd resolved to appoint Matt Byrnes, Phil Campbell-Wilson, and Michael McCann of Grant Thornton Australia Ltd, as voluntary administrators in Australia. Greensill Capital Pty is the parent company for the Greensill Group, and provides administration and head office support to the Group but operates only in a limited capacity.”

Supply Chain Finance

Founded in 2011 by Lex Greensill, Greensill provides Supply Chain Finance to customers across Europe, North America, Latin America, Africa, and Asia. The London-based company also works with a host of banks and institutional investors to provide solid funding streams to underpin the process. Greensill was once reportedly worth as much as $4 billion (approx £2.8 billion).