Greensill Bank Files $441 Million Lawsuit Against UK Government Over COVID Loan Guarantees

Greensill Bank, a subsidiary of the now-defunct finance firm Greensill Capital, is embroiled in a legal battle against Britain’s business department, seeking over 330 million pounds (approximately $441.7 million). This lawsuit stems from the government’s cancellation of guarantees for COVID-19 business loans, as revealed in recent court documents.

The administrators of the German-based bank initiated the lawsuit against the Department of Business and Trade (DBT) last year. This action followed the government’s decision to terminate guarantees for loans that Greensill Capital had extended to businesses associated with commodities tycoon Sanjeev Gupta.

Greensill Bank is claiming 331 million pounds, asserting that this amount is owed under two guarantee agreements established in 2020, shortly after the onset of the pandemic. These agreements were intended to support businesses during a time of unprecedented economic uncertainty.

However, the British government’s legal representatives contend that they were justified in terminating the guarantees. According to court documents presented at a hearing in London’s High Court on January 15, the government argues that Greensill Bank violated the terms of the loan guarantee scheme.

Specifically, DBT’s lawyers highlighted that six borrowers, all ultimately owned by Gupta, received a total of 300 million pounds. This amount significantly exceeds the 50 million pounds limit that the COVID-19 loans scheme permitted for a single group. Such a breach raises serious questions about the compliance of Greensill Bank with the established guidelines.

This lawsuit is just one of many arising from the 2021 collapse of Greensill Capital, a failure that resulted in substantial losses for investors and triggered a wave of lawsuits and regulatory investigations. The fallout from this collapse has been extensive, affecting various stakeholders and raising concerns about the oversight of financial institutions.

Greensill’s largest client, Gupta’s GFG Alliance, has been actively working to refinance its operations in sectors such as steel, aluminum, and energy since Greensill filed for insolvency in 2021. The repercussions of this financial turmoil have been felt across the industry, with significant implications for the companies involved.

In a related development, the government took control of Yorkshire-based Speciality Steel UK, one of the largest steelworks in Britain, last year. This move underscores the broader impact of the Greensill collapse on the UK’s industrial landscape and the ongoing efforts to stabilize affected sectors.

(Reporting by Sam Tobin; editing by Susan Fenton)

Photograph: AdobeStock. Generated with AI

Greensill Bank, a subsidiary of the now-defunct finance firm Greensill Capital, is embroiled in a legal battle against Britain’s business department, seeking over 330 million pounds (approximately $441.7 million). This lawsuit stems from the government’s cancellation of guarantees for COVID-19 business loans, as revealed in recent court documents.

The administrators of the German-based bank initiated the lawsuit against the Department of Business and Trade (DBT) last year. This action followed the government’s decision to terminate guarantees for loans that Greensill Capital had extended to businesses associated with commodities tycoon Sanjeev Gupta.

Greensill Bank is claiming 331 million pounds, asserting that this amount is owed under two guarantee agreements established in 2020, shortly after the onset of the pandemic. These agreements were intended to support businesses during a time of unprecedented economic uncertainty.

However, the British government’s legal representatives contend that they were justified in terminating the guarantees. According to court documents presented at a hearing in London’s High Court on January 15, the government argues that Greensill Bank violated the terms of the loan guarantee scheme.

Specifically, DBT’s lawyers highlighted that six borrowers, all ultimately owned by Gupta, received a total of 300 million pounds. This amount significantly exceeds the 50 million pounds limit that the COVID-19 loans scheme permitted for a single group. Such a breach raises serious questions about the compliance of Greensill Bank with the established guidelines.

This lawsuit is just one of many arising from the 2021 collapse of Greensill Capital, a failure that resulted in substantial losses for investors and triggered a wave of lawsuits and regulatory investigations. The fallout from this collapse has been extensive, affecting various stakeholders and raising concerns about the oversight of financial institutions.

Greensill’s largest client, Gupta’s GFG Alliance, has been actively working to refinance its operations in sectors such as steel, aluminum, and energy since Greensill filed for insolvency in 2021. The repercussions of this financial turmoil have been felt across the industry, with significant implications for the companies involved.

In a related development, the government took control of Yorkshire-based Speciality Steel UK, one of the largest steelworks in Britain, last year. This move underscores the broader impact of the Greensill collapse on the UK’s industrial landscape and the ongoing efforts to stabilize affected sectors.

(Reporting by Sam Tobin; editing by Susan Fenton)

Photograph: AdobeStock. Generated with AI