Greensill Capital filed for insolvency on Monday after losing insurance coverage for its debt repackaging business and said in its court filing that its largest client, GFG Alliance, had started to default on its debts, Reuters reported. Greensill began to unravel last Monday when its main insurer stopped providing credit insurance on $4.1 billion of debt in portfolios it had created for clients including Swiss bank Credit Suisse. The court document supporting Greensill’s insolvency application said without that insurance, Greensill was no longer able to sell notes backed by debts to investors, nor fund clients such as GFG in return. “GFG has fallen into severe financial difficulty,” the court filing said. “GFG has started to default on its obligations.” A spokesman for GFG, which is controlled by Indian-British steel magnate Sanjeev Gupta, declined to comment on the default claim in the filing, or the size of Greensill’s exposure to GFG. Last week, GFG said it had adequate current funds and that its businesses were operationally strong.
