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  • Greensill Capital filed for insolvency yesterday after losing insurance coverage for its debt repackaging business
  • Without the insurance, the company would no longer be able to sell notes backed by debts to investors, nor would it be able fund clients
  • Accountancy firm Grant Thornton has now been appointed administrator of Greensill’s two core U.K. companies
  • Grant Thornton has agreed to sell Greensill’s intellectual property and technology platform for processing client payments to Apollo Global Management for around US$60 million (roughly A$78 million)
  • Trade unions in the U.K. are now expected to meet with officials from Liberty Steel — part of British tycoon Sanjeev Gupta’s GFG Alliance, a major client of Greensill — to seek assurances about job security

Greensill Capital filed for insolvency yesterday after losing insurance coverage for its debt repackaging business.

The company found itself in hot water on Monday last week when its primary insurer stopped providing credit insurance on roughly $5.4 billion of debt in portfolios it had created for major clients, including Swiss bank Credit Suisse.

A court document filed with Greensill’s insolvency application said that, without the insurance, the company would no longer be able to sell notes backed by debts to investors, nor would it be able to fund clients such as GFG Alliance in return.

“GFG has fallen into severe financial difficulty,” the filing said. “GFG has started to default on its obligations.”

Accountancy firm Grant Thornton has now been appointed administrator of Greensill’s two core U.K. companies, which oversaw its business of buying short-term debt and converting it into bonds for sale to investors.

According to the same court filing, Grant Thornton has agreed to sell Greensill’s intellectual property and technology platform for processing client payments to U.S. private equity group Apollo Global Management for around US$60 million (roughly A$78 million).

A formal deal is expected to come within the next day and the firm plans to continue operating Greensill’s supply chain finance business for investment-grade clients.

Trade unions in the U.K. are now expected to meet with officials from Liberty Steel — part of British tycoon Sanjeev Gupta’s GFG Alliance — to seek assurances about job security.

“Sanjeev Gupta needs to tell us exactly what the administration means for Liberty’s U.K. businesses and how he plans to protect jobs,” a statement from the community trade union said.

“The future of Liberty’s strategic steel assets must be secured and we are ready to work with all stakeholders to find a solution.”

GFG has so far declined to comment on the union meeting or what Greensill’s insolvency means for its business, but said last week that it had alternative funders to Greensill and was generating positive cash flow.

“GFG Alliance has adequate current funds and its plans to bring in fresh capital through refinancing are progressing well,” said GFG spokesman Andrew Mitchell.

Liberty is the third-largest steelmaker in Britain, with nine sites employing roughly 3000 people. In total, around 5000 people work for GFG Alliance in the U.K., according to Mitchell.

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