Administrator for Greensill Financial institution sues insurer Zurich for $250mn

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The administrator for the German financial institution that was owned by failed provide chain finance group Greensill Capital is suing insurer Zurich in London’s Excessive Court docket for greater than $250mn over unpaid claims, because the authorized battles stemming from the scandal multiply.

Greensill, which was based by Australian financier Lex Greensill and counted former UK prime minister David Cameron as an adviser, collapsed in 2021 after failing to safe new insurance coverage cowl for the securities it packaged up for buyers.

Earlier than its implosion, Greensill would lend cash to purchasers and take invoices from their suppliers or prospects as collateral. The loans had been then bundled into securities and offered to buyers.

Greensill’s demise has already led to a number of lawsuits, together with in opposition to its former credit score insurers as buyers attempt to get better losses.

The agency acquired a Bremen-based lender in 2014, which it renamed Greensill Financial institution. The lawsuit centres on funds Greensill made to Liberty Commodities that had been backed by money owed purportedly owed to Liberty by firms together with Trafigura and ArcelorMittal. These cost obligations had been then shifted to Greensill Financial institution.

Liberty Commodities is a part of GFG Alliance, a set of companies owned by Sanjeev Gupta, a metals magnate who was one in all Greensill’s largest purchasers.

The administrator for the financial institution claims that it has didn’t obtain the monies owed, which it says is an insured loss underneath the lender’s coverage with Zurich.

In accordance with the lawsuit, Zurich agreed to indemnify Greensill Financial institution in respect of sure losses from October 2018 to March 2021. Greensill Financial institution mentioned it claimed on its Zurich coverage in March final yr however had not been paid.

White Oak, one other Greensill investor, claimed in a separate lawsuit this yr that some firms listed as owing Liberty Commodities cash had “no transaction historical past in any way” with the group. GFG has beforehand claimed it may borrow in opposition to hypothetical future invoices in its transactions with Greensill.

Alongside the authorized motion within the Excessive Court docket, the administrator for Greensill Financial institution can also be suing different insurers within the Australian courts. If the fits in Australia are profitable, any sums acquired will likely be offset in opposition to these it’s searching for from Zurich, in keeping with the London lawsuit.

In a press release, Zurich mentioned that it believes it “has meritorious defences to the coverage and the claims raised and can vigorously contest the motion”.

GFG mentioned in a press release that it had signed a time period sheet on a “full debt restructuring settlement” with Greensill Financial institution’s administrator.

Greensill Financial institution’s administrator, ArcelorMittal and Trafigura declined to remark.