Greensill’s Australian arm enters administration
The Australian arm of controversial supply chain financier Greensill Capital has been placed into administration after it warned overnight it was in "severe financial distress" and unable to repay a $140m loan to Credit Suisse.
Grant Thornton was appointed as the administrator of Greensill's Australian operations on Tuesday morning. This follows Grant Thornton being appointed to the head company in the London overnight.
Chris Laverty, Trevor O'Sullivan and Will Stagg of Grant Thornton have been appointed as joint administrators of Greensill's UK operations (GCUK). Meanwhile Matt Byrnes, Phil Campbell-Wilson, and Michael McCann, also of Grant Thornton, have been appointed the voluntary administrators in Australia.
It comes after Greensill was hit by "defaults" from its key customer Sanjeev Gupta's GFG Alliance.
In a statement, the administrators said it was possible that Greensill - an empire founded by Bundaberg farmer turned global financier Lex Greensill, could be carved up.
"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, the administrators said.
Mr Byrnes said: "we are working closely with the UK administrators in relation to next steps in the administration process".
"We are not able to comment on any individual customer's position at this stage. GCUK, as the provider of finance for the Greensill Group via its supply-chain finance working capital products, is insolvent and is now in administration. The UK administrators will write to creditors with an update shortly."
The administrators of Greensill Capital in Australia will convene the initial meeting of creditors within eight business days. A Greensill spokesman in Australia was directing all enquiries to Grant Thornton.
Overnight in London, Greensill Capital administrators Grant Thornton said discussions were continuing with "an interested party", understood to be US group Apollo Global Management.
Greensill's main insurer cut a $4.6bn policy last week as it grew uncomfortable over its exposure, triggering Credit Suisse to wind down $US10bn of funds invested in loans arranged by the financier.
"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 Limited," Grant Thornton said in a statement.
"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."
The move equates to filling for insolvency protection in the US, days after regulators took over its banking unit and Credit Suisse Group AG froze investment funds that were critical to the start-up's operations.
The company, founded by Queensland-born Lex Greensill, specialises in short-term supply chain financing for businesses, but itself faces funding problems and mounting questions over opaque and complex accounting methods.
The administration comes after European regulators ratcheted up the pressure on Greensill Capital and UK businessman Sanjeev Gupta's GFG Alliance, asking European banks for details of their exposure to both companies.
Mr Gupta's metals and mining empire is seen as most at risk from the loss of financing facilities associated with Lex Greensill's financial services companies, with the Bundaberg-born financier having financed GFG's acquisition of a string of global assets, including bankrolling the €740m ($1.14bn) acquisition of ArcelorMittal's struggling European steel mills by Mr Gupta's Liberty Delta in 2019.
Greensill has also supplied ongoing funding through supply chain financing services to Mr Gupta's Liberty Primary Metals operations in Australia. The news of increased scrutiny of his international borrowings comes as the Australian Workers' Union held emergency talks with GFG's Australian management, seeking assurances over the future of industrial facilities including South Australia's Whyalla steelworks.
The administration caps a crisis-hit month for Greensill, whose collapse risks more than 50,000 jobs - including over 7,000 in Australia - across the group and its customers.
Greensill lawyers appeared before a UK court on Monday, stating in court documents that it has "fallen into severe financial distress" and can no longer pay debts, reports said.
Originally published as Greensill's Australian arm enters administration