The sudden downfall of supply chain finance (SCF) heavyweight Greensill was triggered after US$4.6bn in insurance cover fell away overnight, court documents reveal. Problems with Greensill’s trade credit insurance cover first arose in July 2020, when Australia’s Bond and Credit Company (BCC) said it did not intend to renew or extend policies due to expire this month. Though Greensill continued to push for renewal, and later sought alternative cover through its broker Marsh, those efforts were unsuccessful. On March 1, the company sought a last-ditch, out-of-hours ruling from the supreme court of New South Wales that would force the renewal of its insurance cover – but was unsuccessful. That caused an immediate chain reaction, with Credit Suisse choosing later the same day to freeze funds that provide more than US$10bn to Greensill – prompting concerns the London-headquartered company could go bankrupt within days. A source close to Credit Suisse has confirmed to GTR that the non-renewal of that insurance cover was a factor in its decision, as it made it more difficult to value the funds properly. It has since emerged that although Greensill is seeking insolvency protection in Australia and the UK, its core SCF business will likely be… continue reading
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Source: CTRM Center