SoftBank-Backed Greensill Capital Seeks UK Insolvency Protection

London-based Greensill Capital filed for insolvency protection following the takeover of its banking services division by U.K. regulators and the freezing of its funds by the Credit Suisse Group, The Wall Street Journal reported. 

Lawyers for Greensill went in front of a U.K. court on Monday (March 8) and stated that the company is experiencing hard times and can’t pay creditors. By filing for insolvency, Greensill is protected from legal action by creditors while it reorganizes. 

Greensill, which specializes in supply chain finance — where businesses borrow to pay suppliers — was also crippled last week when its main insurer wouldn’t renew a $4.6 billion contract and Credit Suisse froze a large portion of its funds.

Credit Suisse also asked for repayment of a $140 million loan, an amount Greensill’s lawyers said it had no means of repaying. As Greensill was backed by SoftBank’s Vision Fund with $1.5 billion in 2019, the company’s filing could put SoftBank’s investment stake at risk of being wiped out. Greensill was once reportedly worth as much as $4 billion. 

Co-founded by Lex Greensill and Jason Austin, the company offered supply chain financing to firms that were less likely to get the attention of mainstream banks. Last year, Greensill said it issued over $143 billion in funding to more than 10 million customers.

As part of its insolvency process, Greensill will sell off its central operations; the company is in discussions with Apollo Global Management and its insurance affiliate, Athene Holding. Greensill had acquired several FinTech firms in the past 18 months, including Finacity Corp., Earnd and Omni Latam.

Credit Suisse froze $10 billion in investment funds last week that Greensill Capital used for supply chain financing. Among other things, the German financial services firm was worried about Greensill’s exposure to British steel businessman Sanjeev Gupta.

The question remains whether Greensill’s problems were a one-time debacle or a sign of deeper issues in the supply chain financing industry. Some of Greensill’s clients ended up defaulting due to their own issues, including the construction upstart Katerra, to which Greensill had extended $435 million in funding.