Greensill Bank Sues UK Government for $441 Million Over COVID Loan Guarantees

Greensill Bank, a subsidiary of collapsed finance firm Greensill Capital, is suing Britain’s business department for just over 330 million pounds ($441.7 million) after it canceled guarantees for COVID-19 business loans, court documents showed.

The administrators of the German-based bank sued Britain’s Department of Business and Trade (DBT) last year after the government terminated guarantees for loans made by Greensill Capital to businesses linked by commodities tycoon Sanjeev Gupta.

Greensill Bank is seeking 331 million pounds which it says is payable under two guarantee agreements reached in 2020, months after the pandemic began.

But the British government’s lawyers said in court documents, produced for a hearing at London’s High Court on Thursday [Jan. 15], that it was entitled to terminate the guarantees because Greensill Bank breached the terms of the scheme.

Six of the borrowers, each of which was “ultimately owned” by Gupta, were granted a total of 300 million pounds when the COVID-19 loans scheme only allowed 50 million pounds to be given to a single group, DBT’s lawyers argue.

The lawsuit is the latest concerning the 2021 collapse of Greensill, which caused heavy losses for investors and prompted lawsuits and regulatory probes.

Greensill’s largest client was Gupta’s GFG Alliance, which has been refinancing its businesses in steel, aluminum and energy after Greensill filed for insolvency in 2021.

The government took control of Yorkshire-based Speciality Steel UK, one of Britain’s largest steelworks, last year.

($1 = 0.7472 pounds)

(Reporting by Sam Tobin; editing by Susan Fenton)

Photograph: AdobeStock. Generated with AI