Greensill administrators to push for liquidation, as debts reach $4.9bn

Greensill Capital hasn’t filed an Australian tax return for at least five years, say administrators, who recommend liquidation.

Australian Lex Greensill, of Greensill Capital. Picture: Annabel Moeller

Greensill Capital has not filed an Australian tax return for at least four years, according to the latest report from the company’s administrators, who will next week recommend the creditors vote to put the one-time financial services darling into liquidation with debts estimated at $4.9bn.

The latest report from administrators Grant Thornton, released overnight on Thursday, says Greensill Capital’s Australian staff should get the $2.2m in entitlements they are owed, but other creditors – including Japan’s SoftBank, owed $1.5bn – will have to wait for the UK administrators until untangle Greensill’s labyrinth financial affairs before they know whether they will receive any cash at all.

Grant Thornton said in the report that Greensill Capital has just $4 million in the bank and its four remaining staff are working out of temporary offices as administrators try to sell its sole remaining asset, fintech company Omni, valued at about $26m on Greensill’s books.

The vast majority of Greensill’s $4.9bn in debts relates to a contingent claim by the Association of German Banks, seeking to recover €2bn for refunds of depositors in Bremen-based Greensill Bank, also being wound up.

But Grant Thornton said this amount could be reduced if its administrators, which have won a freezing order over Greensill Bank’s Australian assets, recover money from the sale of assets.

Earlier this year German regulators froze the bank’s business, impacting €3.5bn of deposits.

Grant Thornton’s latest report on the state of the financial services unicorn will be presented to creditors next week, along with a recommendation the financial services company be liquidated.

“We have recommended to creditors that the company be wound up, as we believe that it is the only suitable option available to creditors based on the information on hand at the time of issuing our report, the fact that no deed of company arrangement proposal was received, and given that the company is insolvent,” Grant Thornton said in its report to creditors.

The report gives a fresh insight into the complex web of interrelated transactions between the Australian head office and its subsidiaries across the globe, confirming SoftBank pumped another $US440m into Greensill Capital in November, as clouds grew around its operations and relationships with Sanjeev Gupta’s GFG Alliance.

Greensill’s collapse was triggered by the March 1 lapse of key insurance policies covering its operations, and potential defaults by supply chain finance clients, but documents filed in Australian courts show that Greensill’s insurers told the company in September 2020 they did not intend to extend the insurance coverage further.

SoftBank reportedly pumped in the additional funding to pay off investors in Credit Suisse Group investment funds, who had invested in bonds associated with a non-performing loan Greensill made to Katerra, a US start-up also backed by SoftBank’s venture capital arm.

But the Grant Thornton report suggests the $US440m SoftBank loan was passed on to Greensill’s UK operating company, and then to Greensill Bank.

Greensill’s London-based operating arm called in Grant Thornton’s UK division to begin talks over restructuring and contingency planning for “potential insolvency” on December 31, previous documents filed with the corporate regulator show, only six weeks after SoftBank extended the additional cash lifeline on November 10.

The latest Grant Thornton report also shows that Greensill Capital was well behind on filing annual tax returns to the Australian Taxation Office, and had sought additional time for its filings due to the complexity of the group’s international operations.

“The ATO also advised of outstanding income tax returns for the years ended 31 December 2017, 2018, 2019 and 2020,” the report says.

“We understand that the Company had sought an extension to complete and file the income tax returns. The extensions were sought on the basis of a complexity arising with the Greensill Group structure and legal advice was being sought as to the necessity to group income of certain overseas subsidiaries.”

Grant Thornton also confirmed the family trust of Peter Greensill, the brother of founder Lex, claims to be owed $78.5 million by the company, over a $US60m loan entered onto the company’s books in October 2020.

Grant Thornton said its initial investigations into “unreasonable” director-related transaction have identified a number worthy of review, including payments of about $US174 million, described as “payment of proceeds PG Family Trust” in Greensill Capital’s internal accounting system.

Management have indicated that these transactions in part relate to the sale of shares by Peter Greensill, however at this stage we are not in possession of sufficient documentation to confirm,” the report said.

“At the time of preparing this report we have not formed a concluded view on the circumstances of movements in this account, and advise that additional investigations will be undertaken should the company be placed into liquidation,” the report says.

Originally published as Greensill administrators to push for liquidation, as debts reach $4.9bn