Greensill Capital, plunged into financial crises, files for insolvency in U.K. court

Greensill Captial files for insolvency on Monday as the company is facing a major financial crisis and struggling to repay $140 million debt to Credit Suisse.

Greensill's attorneys officially appeared before the U.K. court on Monday arguing that the firm had sunk into "serious financial hardship" and that it could no longer pay its debts. The aim of filing for administration in the U.K. is to help a corporation pay down its obligations and escape insolvency. The corporation will have been shielded against legal proceedings by creditors.

Greensill is a multinational source of funding working capital for businesses and individuals. According to its website, more than $143 billion have been spent on lending to more than 10 million customers.

Greensill offers supply-chain financing, a type of short-term cash advance that gives firms more time to pay their suppliers.

Credit Suisse has frozen $10 billion in investment funds that Greensill relies on doing supply-chain finance transactions, plunging the group into crisis.

Credit Suisse and GAM funds could face damages if Greensill's clients were unable to repay their supply chain finance loans. More than 50 percent of the borrowers in the Credit Suisse funds were located in the United States, including blue-chip firms and government departments.

As part of the insolvency process, Greensill is in the process of selling its main business to Apollo Global Management and its insurance subsidiary Athene Holding for about $100 million, The Wall Street Journal previously reported.

Founded by Lex Greensill in 2011, the company offers Supply Chain Finance to clients in Europe, North America, Latin America, Africa, and Asia, and collaborates with several banks and institutional investors to provide reliable financing.

Meanwhile, In Germany, where Greensill operates a bank, the financial regulator BaFin has lodged a criminal complaint with prosecutors in Bremen, where the lender is headquartered.

BaFin also halted Greensill Bank's activities, claiming that there was an immediate danger that it would be bankrupt. The German bank retained Greensill Capital's short-term debt on its balance sheet before being securitized and sold to Credit Suisse, Reuters reported.