SoftBank-backed startup Greensill faces bankruptcy after Credit Suisse freezes $10 billion in funds over asset values, report says

<p><img src="https://static1.businessinsider.com/image/603e3fe687d37600190d094b-2400/2019-07-07T110751Z_4691303_RC19EFE03100_RTRMADP_3_GREENSILL-GFG-BONDS.JPG" border="0" alt="2019 07 07T110751Z_4691303_RC19EFE03100_RTRMADP_3_GREENSILL GFG BONDS.JPG" data-mce-source="REUTERS/Fabian Bimmer"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><ul class="summary-list"><li>UK-based Greensill is facing bankruptcy after Credit Suisse froze $10 billion in funds tied to the firm.</li><li>Credit Suisse had grown concerned over Greensill's ties to steel magnate, Sanjeev Gupta, the Wall Street Journal reported.</li><li>A second Swiss lender, GAM Holding, also suspended an investment fund connected to the finance firm.</li><li><strong><a href="https://newsletter.businessinsider.com/join/4np/10-things-opening-bell'utm_source=markets&amp;utm_medium=ingest'utm_source=markets&amp;utm_medium=ingest'utm_source=markets&amp;utm_medium=ingest'utm_source=markets&amp;utm_medium=ingest" target="_blank" rel="noopener">Sign up here for our daily newsletter, 10 Things Before the Opening Bell</a>.</strong></li></ul><hr><p>SoftBank-backed Greensill Capital is facing bankruptcy after Credit Suisse froze $10 billion worth of investment funds linked to the UK-based lender, the <a href="https://www.wsj.com/articles/credit-suisse-suspends-funds-tied-to-softbank-backed-greensill-11614599752">Wall Street Journal reported</a>.</p><p>The <a href="https://www.credit-suisse.com/about-us-news/en/articles/media-releases/csam-suspends-supply-chain-finance-funds-202103.html">Swiss bank said on Monday</a>&nbsp;it suspended the funds because some assets in them are "currently subject to considerable uncertainties with respect to their accurate valuation."</p><p>Greensill has appointed Grant Thornton to guide it through possible restructuring, and it could file for insolvency within days, WSJ said, citing sources. The lender is also exploring a potential sale of its operating business for $100 million, representing a fraction of its peak valuation of $4 billion, to private-equity firm Apollo Global Management.</p><p>The lender was founded in 2011 by 44-year-old Lex Greensill, a former Citigroup and Morgan Stanley financier. The former banker from Australia, who is also a client of Credit Suisse's private bank, established his billionaire status when SoftBank plowed $1.5 billion of funding into his company in 2019, according to the <a href="https://www.ft.com/content/52957c7d-c6ae-45de-904d-eaed3036c83f">Financial Times</a>.&nbsp;</p><p>Greensill did not immediately respond to Insider's request for comment.</p><p>The startup specializes in supply-chain finance that allows businesses to lengthen the time to make payments to their suppliers. Greensill packages these short-term cash advances into bond-like securities to sell to investors that would then get a higher return than they would from bank deposits. Credit Suisse, its key source of financing, was a major buyer of Greensill's securities.</p><p>Problems began when the Swiss bank grew concerned over Greensill's ties to UK-based steel tycoon Sanjeev Gupta, a former shareholder in the British startup, WSJ reported. Greensill supplied financing to Gupta, who was then able to build a metals empire by procuring failed steel mills and other distressed industrial businesses.&nbsp;</p><p>Another reason that led to Credit Suisse's suspension is that Greensill's insurance policies, which were a key factor behind investor comfort, expired recently, according to WSJ's sources.</p><p>Another Swiss fund manager, GAM Holding, also <a href="https://www.gam.com/en/news-articles/press-releases/corporate/gam-to-initiate-orderly-wind-down-of-gam-greensill-supply-chain-finance-fund">froze an investment fund</a> linked to Greensill on Tuesday due to "recent market developments and resulting media coverage."</p><p><strong>SEE ALSO:&nbsp;<a href="https://markets.businessinsider.com/news/stocks/jack-dorseys-square-kickstarts-in-house-banking-services-year-approval-2021-3-1030139726" >Jack Dorsey's Square kickstarts in-house banking services nearly a year after receiving conditional approval</a></strong></p><p><a href="https://markets.businessinsider.com/news/stocks/softbank-backed-greensill-capital-faces-bankruptcy-after-credit-suisse-suspension-2021-3-1030141203#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/pikes-peak-hill-climb-colorado-most-dangerous-racetrack-2020-2">Why Pikes Peak is the most dangerous racetrack in America</a></p>
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