Collapsed supply chain finance (SCF) firm Greensill began contingency planning for insolvency as early as December last year, a new document filed with Australia’s corporate regulator shows.
Grant Thornton, which has since been appointed as administrators to Greensill in the UK and Australia, was first engaged by Greensill’s UK arm in “late December” according to a filing to the Australian Securities and Investments Commission (ASIC), seen by GTR.
Greensill was not publicly reported to be mulling insolvency until March 1, when Credit Suisse confirmed it had pulled the plug on investment funds worth around US$10bn in funding for the firm.
Grant Thornton UK was formally engaged by Greensill on December 31 “to assist with contingency planning which included conducting supporting analysis in relation to the options and financial outcomes available to the companies as they sought to restructure”, the relationships declaration, authored by administrator Matthew Byrne, shows.
Between December 31 and March 8, Grant Thornton’s UK (GTUK) and Australian (GTAL) branches held eight online meetings to discuss contingency planning for Greensill’s financial predicament.
“The purpose of the meetings was to allow GTAL to provide GTUK with considerations in relation to a potential insolvency of the company in Australia, which was one of the potential outcomes of the contingency planning,” Byrne wrote.
“The calls were typically for between 30 to 45 minutes and the status of the restructure and contingency planning was discussed, including the implications for the company.”
The document does not explain why Greensill engaged Grant Thornton in December. Greensill’s insurer had told the company in July 2020 that it would not renew US$4.6bn in cover, documents filed in the New South Wales Supreme Court last week revealed.
Greensill became aware on March 1 that “additional funding” anticipated by Greensill in the UK would not be forthcoming, the document adds.
Greensill did not respond when contacted by GTR.
After Credit Suisse’s bombshell, Grant Thornton’s Australian administrators attended a 30-minute Zoom meeting with their UK colleagues and Greensill directors on March 2, the document says.
The document reveals Lex Greensill’s business was beginning to unravel even as the financier touted a possible float of the company.
Just four weeks before contingency planning for an insolvency began, the company’s founder confirmed to The Australian that Greensill was considering an IPO, telling the newspaper that a listing in Sydney was “in the top three that we are considering as to where we would choose as our location”.
Greensill also embarked on a global fundraising drive in the last quarter of 2020, according to multiple media reports, aiming to secure between US$500mn and US$600mn in fresh capital based on a valuation of US$7bn.
A Bloomberg Businessweek profile of Greensill published in mid-February described a float as his ultimate aim for the company.
Greensill Capital Pty Ltd, the group’s parent company, is incorporated in the small Queensland city of Bundaberg, where the Greensill family runs a farming business.
The administrators’ report, which is intended to disclose any relationships with Greensill or parties connected to it, said the parent company employs around 35 people in Australia, but “does not appear to actively trade in its own right”.
Credit Suisse, Japanese investment giant SoftBank and the Australian Tax Office are listed by Grant Thornton as Greensill creditors, while law firm Allen & Overy is providing legal advice to the company.
Greensill has been seeking to sell its core supply chain finance business, which sources tell GTR is healthy, though as of press time the prospects of a deal appear unlikely.
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