Greensill Bank, a subsidiary of the now-defunct Greensill Capital, is suing Britain’s Department of Business and Trade (DBT) for £331 million ($441.7 million AUD). The lawsuit arises from the cancellation of guarantees for COVID-19 business loans. Greensill Capital was a financial services company that specialized in supply chain finance and related services. Greensill Bank, its German-based subsidiary, facilitated much of this lending activity.
The administrators of Greensill Bank initiated legal action last year following the government’s decision to terminate guarantees on loans made to businesses connected to commodities magnate Sanjeev Gupta. Greensill Bank argues that the £331 million is payable under two guarantee agreements established in 2020, shortly after the onset of the pandemic.
However, lawyers representing the British government contend that the DBT was justified in terminating the guarantees due to breaches of the scheme’s terms by Greensill Bank. The government’s legal team asserts that six borrowers, all ultimately owned by Gupta, received a total of £300 million in loans. This exceeded the COVID-19 loans scheme limit, which restricted lending to a single group to £50 million.
The lawsuit is the latest development stemming from Greensill’s collapse in 2021, which resulted in substantial losses for investors and triggered numerous lawsuits and regulatory investigations. Gupta’s GFG Alliance, Greensill’s largest client, has been involved in refinancing its steel, aluminium, and energy businesses since Greensill’s insolvency. Last year, the government took control of Speciality Steel UK, a major steelworks based in Yorkshire.
