Bluestone Sues Greensill Capital Store for Fraud

Greensill would typically provide short-term loans to companies to help them manage their cash flow. Bluestone’s loan was unusual in that it was supposed to run for several years, with short-term loans going on and on. To secure the funding, Bluestone paid $ 108 million directly back to Greensill in the form of taxes, the lawsuit alleges. Greensill also received a warrant to buy a bet in Bluestone worth another $ 100 million, the films claim.

Bluestone was one of Greensill’s biggest messengers, The Wall Street Journal has reported, and the suit appears to be the first example of a client suing Greensill for its business practices. It shows how Greensill is alleged to have made it in recent months to secure more funding as it neared the final issue to bankruptcy.

The suit also names Greensill founder Lex Greensil l and Roland Hartley-Urquhart, Greensill’s chief executive who handled the deal with Bluestone.

A spokesman from Greensill declined to comment. Mr Hartley-Urquhart submitted a request for comment to Greensill. Mr Greensill did not return a request for comment. A representative for Mr. Justice request for comment. Internal and external lawyers for Bluestone did not return requests for comment.

Bluestone alleges that Greensill did not disclose the extent of its financial difficulties during its relationship, or its funding sources, involving investment funds run by Credit Suisse Group AG

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, from which some of the loans were made to Bluestone. Bluestone says they agreed to pay more taxes to Greensill who demanded it last fall.

Mr. Justice is the billionaire governor in West Virginia who switched parties from Democratic to Republican in 2017. He has several coal-related businesses in the region, and has resolved a number of issues in recent years. for charges of unpaid bills, according to the court. records published by the research journalism website ProPublica.

Greensill was founded in 2011 by Mr. Greensill, a former banker of Morgan Stanley and Citigroup Inc. It was repaired in a crisis earlier this month when Credit Suisse froze $ 10 billion in investment funds that Greensill relied on to fuel much of its business. Greensill filed for bankruptcy in the UK last week, and regulators have taken over a bank they own in Germany.

Greensill specialized in an area called supply chain finance, a type of cash promotion that allows companies to extend the time to pay bills. Greensill was packing these cash advances into bondlike securities. Credit Suisse funds were a major buyer of these securities, giving Greensill firepower to expand its business.

Credit Suisse sold the money to insurers and other professional investors, classifying them as relatively low risk, according to asset documents sent to investors.

The loans to Bluestone show that some of the loans in the fund were more risky than Credit Suisse claimed. The majority of loans made to Bluestone were based on “prospective receipts,” which had not yet been generated, from a list of “potential buyers,” some of which would not be available. ever Bluestone customers, the movies are claiming.

Prior to the pandemic, Bluestone had agreed a four to five year funding period with Greensill, but states that Greensill extended the period to six to eight years and “forced Plaintiffs to continue to expand their exposure to Greensill. and deepening. Capital, ”according to a lawsuit.

In addition to Bluestone, Greensill’s other U.S. clients included several blue-chip companies and state government agencies, according to documents sent by Investor Credit Suisse to investors. More than half of the funds in the Credit Suisse fund were tied to futures in the U.S. since January, according to the documents.

—Andrew Scurria added to this article.

Write to Duncan Mavin at [email protected] and Julie Steinberg at [email protected]