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The administrator for the German bank that was owned by failed supply chain finance group Greensill Capital is suing insurer Zurich in London’s High Court for more than $250mn over unpaid claims, as the legal battles stemming from the scandal multiply.
Greensill, which was founded by Australian financier Lex Greensill and counted former UK prime minister David Cameron as an adviser, collapsed in 2021 after failing to secure new insurance cover for the securities it packaged up for investors.
Before its implosion, Greensill would lend money to clients and take invoices from their suppliers or customers as collateral. The loans were then bundled into securities and sold to investors.
Greensill’s demise has already led to several lawsuits, including against its former credit insurers as investors try to recover losses.
The firm acquired a Bremen-based lender in 2014, which it renamed Greensill Bank. The lawsuit centres on payments Greensill made to Liberty Commodities that were backed by debts purportedly owed to Liberty by companies including Trafigura and ArcelorMittal. These payment obligations were then shifted to Greensill Bank.
Liberty Commodities is part of GFG Alliance, a collection of firms owned by Sanjeev Gupta, a metals magnate who was one of Greensill’s biggest clients.
The administrator for the bank claims that it has failed to receive the monies owed, which it says is an insured loss under the lender’s policy with Zurich.
According to the lawsuit, Zurich agreed to indemnify Greensill Bank in respect of certain losses from October 2018 to March 2021. Greensill Bank said it claimed on its Zurich policy in March last year but had not been paid.
White Oak, another Greensill investor, claimed in a separate lawsuit this year that some companies listed as owing Liberty Commodities money had “no transaction history whatsoever” with the group. GFG has previously claimed it could borrow against hypothetical future invoices in its transactions with Greensill.
Alongside the legal action in the High Court, the administrator for Greensill Bank is also suing other insurers in the Australian courts. If the suits in Australia are successful, any sums received will be offset against those it is seeking from Zurich, according to the London lawsuit.
In a statement, Zurich said that it believes it “has meritorious defences to the policy and the claims raised and will vigorously contest the action”.
GFG said in a statement that it had signed a term sheet on a “full debt restructuring agreement” with Greensill Bank’s administrator.
Greensill Bank’s administrator, ArcelorMittal and Trafigura declined to comment.