Greensill Capital collapse (2021)

On March 1, 2021, Credit Suisse froze four supply chain finance funds of about 10 billion dollars, fed almost entirely by Greensill Capital. The same day, a New South Wales court refused Greensill the injunction it had sought to keep its trade credit insurance policies in force; they had expired, and they covered several billion dollars of receivables. On March 8, the company went into administration in London. The structure ran on reverse factoring: Greensill paid a large client's suppliers early, the client repaid at maturity, and the receivables, packaged into notes, were sold to the funds. Credit insurance on the notes did the rest; it earned them a rating and comforted investors who were buying a product sold as very safe. With no insurer, there was no issuance and no refinancing, and a firm that lived on rolling its notes stopped within days. Greensill's largest client was GFG Alliance, Sanjeev Gupta's group of steelworks and aluminum plants, with exposure in the order of 5 billion dollars. Part of the notes rested on future receivables, sales GFG expected to make to buyers, some of whom said they had never dealt with it. A receivable that does not exist has no obligor, and a non-payment policy has nothing to pay. The insurer, for its part, disputed policies written by an employee of the Australian underwriting agency BCC (Bond & Credit Co.), a Tokio Marine subsidiary, beyond his delegated authority. In May 2021 the Serious Fraud Office opened an investigation into GFG, including its financing from Greensill; in February 2023 FINMA found that Credit Suisse had seriously breached its supervisory obligations in the matter. In Bremen, BaFin had already imposed a moratorium on Greensill Bank, the German subsidiary, on March 3, closing it to customers, and filed for its insolvency on March 15; municipalities held deposits there that the deposit guarantee scheme did not cover.