Greensill Capital, an Australian company that sits atop the failed financial empire controlled by former Bundaberg sugar farmer Lex Greensill, owes at least $ 1.75bn to lenders and is unable to pay between $ 2m and $ 3m owed to reduntant workers.
The company is also facing an additional claim from German banks for around € 2bn, although Grant Thornton’s manager Matt Byrne said he had not yet confirmed the claim.
Because most of Greensill’s group operations were based in London, its Australian organization, Greensill Capital, employed only 38 employees – 35 of whom were laid off and made redundant on Monday.
Redundant Employees
In a statement, Grant Thornton said he would assist unemployed workers in applying for their rights under the provincial government’s Fair Entitlements Guarantee scheme, which makes payments when companies collapse without money to meet their obligations to employees.
Administrators in Australia, the UK and Germany, where Greensill once owned their branches of the bank, are now dealing with debris left after a collapse, which has thrown into doubt tens of thousands of jobs at businesses, including the Whyalla steel mill, that relied on the group for finance.
The company has provided “supply chain finance” – loans to big companies so that they could pay their suppliers.
The Australian Securities and Investments Commission is looking into the impact of Greensill’s failure on the Australian market, the deputy chairman of the regulator, Karen Chester, told parliament.
Risky Business Model
“This has been an incredibly risky business,” Chester said.
She said Greensill’s condition was being considered by various Asic groups.
“I think it’s fair to say that at the moment our focus is on having a complete understanding of what’s happened with Greensill, working out what impact it has in the Australian market, and what we need to do, if anything, to address any concerns that we have,” she said.
Creditors of the Australian company met with Byrne on Friday morning.
Japan’s Venture capital Softbank, heavily funded by Saudi Arabia, is the company’s largest creditor, owing more than $ 1bn.
Credit Suisse, which ran funds that fed money into the Greensill machine, is owed about US$140m.
The Greensill family has also been a creditor, claiming it owed about US $ 60m.
Byrne is yet to decide which of the debts creditors claim to be owed should be admitted.
It is understood he told creditors that the company he controls has a claim worth about US$800m against the UK operation, which is in administration through the British arm of Grant Thornton.
Creditors were also told there would be a significant shortfall, with not enough money on hand to pay staff entitlements including redundancy payouts.
The company’s main asset is its ownership of the UK business, which was reportedly close to being sold to hedge fund Apollo before a catastrophic failure to renew insurance on $4.6bn in lending when it expired on 1 March triggered Greensill’s sudden collapse.
However, it is not clear how much, if any, value remains in the shattered business and how much of anything that can be recouped would flow back to Australian creditors.
Greeensill Capital also owns Earnd, a fintech that allows employees early access to their pay, which it is understood Byrne will attempt to sell.
