UK agency seeks to ban Lex Greensill from running companies for 15 years

Australian supply chain financing (SCF) entrepreneur Lex Greensill, whose global empire was worth US$3.5 billion two years before its 2021 collapse, faces the prospect of being banned from running companies for 15 years in the UK following an investigation by the country's Insolvency Service.

"We can confirm that the Insolvency Service has commenced director disqualification proceedings against Alexander (Lex) Greensill to have him disqualified from running or controlling companies for a period of up to 15 years in respect of his conduct as a director of Greensill Capital (UK) Limited and Greensill Limited," says a spokesperson for the agency.

These two businesses were subsidiaries of Bundaberg-based Greensill Capital Pty Ltd, which towards the end of the 2010's raised US$250 million from General Atlantic and $800 million from Japan's Softbank, lifting its staff base to more than 1,000 people spread across 16 offices. 

In 2018 the company founder was made Commander of the British Empire for his services to the economy, by then-Prince Charles, now King Charles, at Buckingham Palace.

The Greensill group of companies engaged in supply chain finance acting as an intermediary between companies and suppliers they owed money to, offering prompt payment to the supplier at a discount before recovering the full sum from the debtor. 

Greensill Capital's subsidiaries were also involved in account receivables financing, but also a high-risk form of lending known as "future accounts receivable finance" based on prospective sales.

In the two years that preceded appointments of administrators to Greensill companies in March 2021 along with an insolvency protection application in the US, the group funded $143 billion worth of receivables. 

In that time, Greensill attracted scrutiny over its SCF activities to numerous companies supported by Softbank, which had also invested $500 million in Credit Suisse funds that were financing Greensill.

The Australian-headquartered group also had a heavy exposure of around $5 billion to Sanjeev Gupta-affiliated GFG Alliance, which in turn was highly dependent on Greensill for its own operations. 

The company also boasted former British Prime Minister David Cameron as an advisor and lobbyist, and it was later revealed that he had petitioned two ministers regarding emergency COVID-19 loan applications that were ultimately rejected in mid-2020. This included correspondence with the then-Chancellor of the Exchequer, current UK Prime Minister Rishi Sunak.

It was shortly after that rejection of COVID-19 relief that a major insurer, Tokio Marine Management which was insuring US$4.6 billion of working capital, would stop providing coverage once policies were to expire in March 2021.

There were other vulnerabilities in the Greensill business model, but this was the straw that broke the camel's back, precipitating a flow-on effect of actions that disrupted the highly-leveraged business.

Shortly before Greensill went into administration, at the start of March Credit Suisse froze $10 billion of funds that were held by Greensill's SCF funds. Two days later, Germany's Federal Financial Supervisory Authority (BaFin) issued a ban on the Greensill Bank and filed a criminal complaint against management.

Greenhill Capital Pty Ltd was placed in liquidation towards the end of April 2021, with its UK subsidiaries entering into creditors' voluntary liquidation the following year in June 2022.

Officials at the UK Insolvency Service have issued disqualification proceedings on behalf of the Secretary of State for Business and Trade in accordance with her powers under the Company Directors Disqualification Act 1986. The application to court has been made in the public interest. 

Anyone who is subject to disqualification orders and disqualification undertakings are bound by a range of restrictions, including not being able to be a director of any company registered in the UK or an overseas company that has connections with the UK, or being involved in the promotion, formation or management a company.