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From “King of Finance” to bankruptcy in less than a month, with serious consequences for everyone …

He who ascends too high, often descends,

precipitevolissimamente ..

Lex Greensill went from being the "Supply Chain Finance King" to bankruptcy in two weeks. Just as a reminder of how ephemeral the glory of the world is. What is supply chain finance, for the layman? These are forms of financing that start from the end customer and serve to finance the entire supply chain backwards. Also known as “Reverse factoring”, it occurs when the company placing the order sends the invoices received for the discount to a factor, in order to allow an advance payment to the supplier. A financial form that serves to make a logistics chain less expensive and more efficient.

Lex Greensil's Greensill Capital seemed to have innovated and updated this mundane trade credit process. Everything seemed to be going well, with a growing business and, all in all, safe for all parties involved, as the company sending supplier invoices to discount were usually large international groups.

Then, yesterday morning, things precipitated as, following the decisions of Credit Suisse and Softbank to abandon the fund that managed all the operations, the GAM Greensill Supply Chain Fund, whose manager, Swiss GAM Holdings therefore had to close contributions and withdrawals, due to "changed market situations". Virtually the fund went liquidation

"A certain portion of [the funds] assets are currently subject to significant uncertainties regarding their accurate valuation." a polite way of saying that you don't know if there will be coverage for whoever put the money….

Greensill said he acknowledged "the decision" to "temporarily" suspend the funds, adding:

"We remain in advanced negotiations with potential outside investors in our company and hope to be able to further update on this upcoming process."

For the FT, Greensill Capital is preparing to file for UK insolvency, putting an end to the suffering of a financial company backed by SoftBank and advised by former Prime Minister David Cameron. Apollo Global Management will probably buy the most interesting shares, while leaving shareholders, such as Softbank's Vision fund, with very little to take home …

Greensill's lawyers have pointed out that the losses may not necessarily be covered by a credit insurance no longer renewed. There are 50,000 people who risk their jobs in the United Kingdom and the old continent, with a hole that can be several billion.

Meanwhile, the market control authorities are moving with delay, starting with BaFin, the German regulator, which has detected irregularities in the German branch, Greensill Bank AG and in its dealings with the companies of the British entrepreneur Sanjeev Gupta. KPMG has now been commissioned to investigate the transcription and accounting of a series of receivables which, it seems, related to transactions not yet carried out … therefore objectively false.


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The article From “King of Finance” to bankruptcy in less than a month, with thoughtful consequences for everyone… comes from ScenariEconomici.it .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/da-re-della-finanza-al-fallimento-in-meno-di-un-mese-con-pensanti-conseguenze-per-tutti/ on Wed, 03 Mar 2021 16:50:52 +0000.