March 10, 2021

Greensill Capital Tumbles Into Insolvency, Spreading Financial Pain

LONDON—Greensill Capital filed for insolvency protection Monday, days after regulators took over its banking unit…

LONDON—Greensill Capital filed for insolvency protection Monday, days after regulators took over its banking unit and Credit Suisse Group AG froze investment funds that were critical to the startup’s operations.

The unwinding has rippled to holders of the Credit Suisse funds, German municipalities that deposited money with Greensill’s bank, and a high-profile duo of venture-capital investors.

Greensill specialized in supply-chain finance, a type of short-term cash advance to companies to stretch out the time they have to pay their bills. The firm was once worth $4 billion based on investments from SoftBank Group Corp.’s Vision Fund. The collapse marks a high-profile blow for the mammoth Japanese investor.

Founded by Australian-born Lex Greensill, the company billed itself as a technology startup that competed with traditional banks such as Citigroup Inc. and JPMorgan Chase & Co. Greensill’s goal was to offer supply-chain finance to companies that had fallen below the radar of traditional banks that preferred larger, more-established clientele.

In a typical supply-chain finance deal, Greensill would pay a company’s suppliers sooner than they would normally expect, but at a discount. The company then would pay Greensill the full amount down the road. The supplier would get paid early, the company would have more flexibility over its cash, and Greensill would be left with a small profit.