The founder of failed supply chain finance firm Greensill Capital has been banned from acting as a company director in the UK for nine years after signing a disqualification agreement with the country’s Insolvency Service.
Lex Greensill, who acted as a director of three Greensill companies prior to the group’s infamous 2021 collapse, had been due to stand trial in London from June 8, accused of breaching his directorial duties in relation to transactions involving construction group Katerra.
However, the UK government announced today he has signed a disqualification undertaking, which the Insolvency Service described as a legally binding agreement not to dispute certain facts in exchange for ending its legal action. The agreement means he is barred from holding boardroom positions in the UK for nine years, beginning June 23.
“Director disqualifications exist to protect the public from those who have demonstrated they are unfit to run companies,” said Insolvency Service chief executive Duncan Beach.
“A nine-year ban is a significant period – above the average for director disqualifications – and reflects the serious nature of Lex Greensill’s conduct.”
A spokesperson for Lex Greensill said: “After four years of investigation, this matter has concluded with no finding that Mr Greensill acted dishonestly or in bad faith.”
The Insolvency Service said in today’s announcement that its case against Lex Greensill arose from a receivables finance arrangement with Katerra, whereby Greensill Capital originated and securitised notes that were then sold to a Credit Suisse fund.
The Katerra receivables started to fall into default in early 2020, and the value of outstanding notes had reached US$440mn by the time of Greensill’s collapse in March 2021, according to a High Court judgment issued in October last year.
Japan’s SoftBank, an indirect investor and lender to Katerra, had agreed in November 2020 to provide US$440mn to Greensill on the understanding that Greensill would use the injection of liquidity to repurchase the outstanding notes from the Credit Suisse fund.
However, Greensill used the majority of those funds for other purposes, while also entering into transactions that meant the receivables no longer needed to be repaid and the underlying security held against them was released. As a result, the Swiss lender was left with losses of US$440mn.
The Insolvency Service said in today’s announcement those transactions were “caused or allowed” by Lex Greensill, and that this conduct “breached his legal duty… to exercise reasonable care, skill and diligence as a company director”.
Lex Greensill’s spokesperson added that separate proceedings against the UK Department for Business and Trade “over the unlawful disclosure of his private information during the Insolvency Service’s investigation” will continue.
“The department has admitted that the disclosure was unlawful and has accepted liability for it,” the spokesperson said.
