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(Sharecast News) - Australian sugar farmer turned financier Lex Greensill has been banned from acting as a company director in the UK for nine years for his role in the collapse of his Greensill Capital group.
He agreed to the disqualification only days before he was due face a six week court trial and after an attempt to have the matter thrown out was rejected by an appeal court in March.
He still faces a separate lawsuit from Greensill Capital's administrator for alleged breaches of fiduciary duty.
"A nine-year ban is a significant period - above the average for director disqualifications - and reflects the serious nature of Lex Greensill's conduct," said the Insolvency Service's chief executive Duncan Beach in a statement.
The high-profile collapse of Greensill's empire dragged in former UK prime minister David Cameron, Indian businessman Sanjeev Gupta and Japanese investor Masayoshi Son, whose Softbank backed the 49-year-old Australian's enterprise.
Greensill was a director of three companies within the Greensill Group, which collapsed in 2021 with combined liabilities of more than 1.6bn and $440m in losses for a Credit Suisse fund.
The Insolvency Service said he failed to exercise "reasonable care, skill and diligence as a company director".
Backed by SoftBank, Greensill provided supply-chain finance to firms to get their invoices paid on time. It used the insurance to guarantee that its borrowers would repay their debts, allowing Greensill to sell on the debt.
Greensill's disqualification related to his company's lending to US construction company Katerra. The financing was funded through the creation and sale of security-backed 'notes' - financial instruments similar to bonds.
The Credit Suisse fund purchased a series of notes backed by receivables (similar to payment obligations) with the notes also benefiting from trade credit insurance.
"Lex Greensill caused the three Greensill companies to enter transactions that removed the legal protections underpinning the Credit Suisse fund's investment in late 2020. the transactions meant that the receivables no longer required payment, security held against those receivables was released, and the payment obligations supporting the fund's trade credit insurance were cancelled. The transactions were entered into without the written consents required," the IS said.
Funds controlled by Credit Suisse bought the loans, which were backed by insurance. However, Greensill directed his companies to enter transactions that removed legal protections from the loan notes, despite lacking the written consents required by law. Credit Suisse ended up losing its investment.
Reporting by Frank Prenesti for Sharecast.com