Greensill Capital’s U.S. Unit Seeks Chapter 11 Protection

Editor’s Note: Click here to read SFNet’s recent article: The Greensill Controversy: SFNet Members Weigh In

Greensill Capital filed for Chapter 11 bankruptcy protection for its U.S. unit in New York, as another part of Lex Greensill’s trade finance empire seeks safety from its creditors.

The firm filed for administration in the U.K. earlier in March, capping a stunning collapse for the specialty finance firm after key backers walked away over concerns about the valuation of its assets. Greensill’s Australian holding company also entered bankruptcy protection earlier this month.

Greensill Capital Inc. listed assets of as much as $50 million and liabilities of up to $100 million in its U.S. petition on Thursday. The unit has no secured debt, court papers show.

The subsidiary, headquartered in New York, sold Greensill’s products to customers in the Americas and passed its revenue directly to the parent company, court papers show. Most of the unit’s more than 70 employees were terminated this month.

A spokesman for Greensill declined to comment further.

Inner Workings

The scandal has entangled a host of the world’s biggest financial firms, from its largest investor SoftBank Group Corp. to key partner Credit Suisse Group AG. The company’s inner workings have been in the spotlight after it collapsed this month, raising questions about how it went from startup to tech unicorn with an estimated $7 billion valuation.

The firm faltered after insurance contracts that underpinned many of the loans Greensill made were not renewed on March 1, forcing Credit Suisse to freeze a $10 billion family of funds that bought them. The decision came on the same day as a court in Australia shot down a last-ditch effort by Greensill to force the insurer to provide more coverage. That set off a chain reaction that led to the lender’s disintegration.

The U.S. unit’s assets include its stake in Finacity Corp., which it plans to sell during the bankruptcy. Other assets include $400,000 cash, furniture and office equipment -- delivered but never used due to the pandemic -- and certain “valuable art pieces” displayed at its Manhattan headquarters, court papers show.

The Peter Greensill Family Trust agreed to provide $2 million of bankruptcy financing for the U.S. unit, which is subject to court approval. Its first court hearing is scheduled for Friday afternoon in New York, with the case assigned to Judge Michael E. Wiles.

The case is Greensill Capital Inc., 21-10561, U.S. Bankruptcy Court for the Southern District of New York (Manhattan).

(Updates with details on U.S. unit beginning in the third paragraph)