Greensill Capital, the Australian company that sits atop the failed financial empire controlled by former Bundaberg sugar farmer Lex Greensill, owes at least $1.75bn to creditors and can’t pay between $2m and $3m owed to staff made redundant.
The company also faces a possible additional claim from German banks of about €2bn, although administrator Matt Byrne of Grant Thornton said he had yet to verify the claim.
Because most of the Greensill group’s operations were run from London, its Australian entity, Greensill Capital, employed only 38 staff – 35 of whom were made redundant on Monday.
In a statement, Grant Thornton said it would assist the redundant employees in making a claim for their entitlements under the federal government’s Fair Entitlements Guarantee scheme, which makes payments when companies collapse without the money to meet their obligations to workers.
Administrators in Australia, the UK and Germany, where Greensill owned a bank, are now combing through the wreckage left behind by the collapse, which has thrown into doubt tens of thousands of jobs at businesses, including the Whyalla steel mill, that relied on the group for finance.
The company provided “supply chain finance” – loans to big companies so that they could pay their suppliers.
The Australian Securities and Investments Commission is examining the impact of Greensill’s failure on the Australian market, the regulator’s deputy chair, Karen Chester, told parliament.
“This became an incredibly risky business model,” Chester said.
She said the Greensill situation was being looked into by several different teams at Asic.
“I think it’s fair to say that at the moment our focus is on having a complete understanding of what’s happened with Greensill, working out what impact it has in the Australian market, and what we need to do, if anything, to address any concerns that we have,” she said.
Creditors of the Australian company met with Byrne on Friday morning.
Japanese venture capital group Softbank, which is heavily backed by money from Saudi Arabia, is the company’s biggest creditor, owed more than $1bn.
Credit Suisse, which ran funds that fed money into the Greensill machine, is owed about US$140m.
A Greensill family trust has also claimed to be a creditor, saying it is owed about US$60m.
Byrne is yet to decide which of the debts creditors claim to be owed should be admitted.
It is understood he told creditors that the company he controls has a claim worth about US$800m against the UK operation, which is in administration through the British arm of Grant Thornton.
Creditors were also told there would be a significant shortfall, with not enough money on hand to pay staff entitlements including redundancy payouts.
The company’s main asset is its ownership of the UK business, which was reportedly close to being sold to hedge fund Apollo before a catastrophic failure to renew insurance on $4.6bn in lending when it expired on 1 March triggered Greensill’s sudden collapse.
However, it is not clear how much, if any, value remains in the shattered business and how much of anything that can be recouped would flow back to Australian creditors.
Greeensill Capital also owns Earnd, a fintech that allows employees early access to their pay, which it is understood Byrne will attempt to sell.
