Greensill’s parent firm placed into liquidation
GROUP’S COLLAPSE THREATENS 50,000 JOBS AT COMPANIES IT FINANCED
THE Australian parent of failed finance firm Greensill Capital, whose recent collapse sparked worldwide corporate fallout and a political scandal in Britain, entered liquidation, administrators said last Thursday (22).
Greensill’s implosion threatens about 50,000 jobs at companies that relied on its supply chain financing, including the steel empire of British Indian businessman Sanjeev Gupta.
Greensill Capital Pty Ltd, which is the parent company of the Global Greensill Group, provided head office support and sourced funding for the finance giant’s operations.
Creditors including Credit Suisse, Japan’s SoftBank and the Association of German Banks met online early last Thursday and “resolved to place the company into liquidation”, according to administrators Grant Thornton.
It provided an overview of the company to its 41 creditors and their representatives, who then voted in favour of liquidation.
Administrators will now wind down activities and attempt to sell off chunks of the business, which was founded in 2011 by Australian Lex Greensill.
“As of today, the company is now in liquidation,” Grant Thornton said. “The liquidators will continue to identify and realise available assets, monitor developments in relation to the administrations of
Greensill UK and the Greensill Bank AG, and continue their investigations in relation to Greensill Capital Pty Limited in liquidation.”
The demise of Greensill Capital Pty Ltd is the latest chapter in a saga that has ensnared Conservative politicians including former prime minister David Cameron.
The company filed for bankruptcy last month for its operations in Britain, and also in Australia where its parent group is based and Germany where it has a banking arm.
The controversial company specialised in short-term corporate loans via a complex business model that ultimately sparked its declaration of insolvency.
Lex Greensill had obtained inside access to the Downing Street machine of then prime minister Cameron, on the promise of helping to provide the government with the latest thinking on financial technology. This year, he privately lobbied senior officials, including chancellor Rishi Sunak for government support before the firm’s business model of supplying interim finance to companies imploded, rendering his share options worthless.
Parliament’s Treasury Committee has launched an inquiry into Greensill’s collapse, with appearances widely expected from Cameron, Sunak, and Lex Greensill.
Greensill faces a string of other inquiries in Britain, with the National Audit Office also probing the firm’s involvement in Covid-19 support schemes and state monitoring of its activities.
Simon Case, Britain’s most senior civil servant, was questioned by MPs about a probe into the collapse of Greensill Capital
Asked if the situation alarming, Case replied “yes”.
And last Friday (23), one of Switzerland’s top shareholders associations called on Credit Suisse to change its corporate strategy and culture following major losses due to risky operations. The bank announced a net loss of 252 million Swiss francs ($275 million, 229 million euros) last Thursday and said it would issue new shares to reinforce its capital base.
The loss was mainly linked to the bankruptcies of British financial firm Greensill and US hedge fund Archegos, two Credit Suisse clients. Ahead of the annual shareholders assembly, the Actares shareholders association took the bank to task for poor risk management. “The example of the Greensill case shows Credit Suisse apparently hasn’t learned to manage complex risks for such an important client,” it said in a statement.
Credit Suisse was heavily invested in Greensill, which specialised in short-term corporate loans via a complex and opaque business model, and was forced to suspend four funds after the firm declared insolvency last month.
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