Liberty Commodities was among the entities owned by Sanjeev Gupta’s GFG Alliance, whose invoices were packaged up into bonds and sold off by the Greensill Group to Credit Suisse.
The Swiss bank, which reported an annual net loss of CHF1.4 billion ($2.18 billion) on Thursday, is still trying to collect billions of dollars owed on some invoices on behalf of investors in the funds.
Insurers are getting hit with claims because the bonds were insured against defaults.
Greensill Capital UK, Greensill Bank and Bundaberg-based Greensill Capital Pty Ltd (the parent entity) have been named as cross-respondents in the claim, which centres on a trade credit insurance policy issued by BCC in March 2019.
BCC said that the Greensill Group entities had earlier conveyed to the insurance agency that it had reviewed the customers’ credit and trading histories with clients.
BCC argues that the submission of each additional customer to a policy by Marsh, which was acting for Greensill Group entities, indicated that each “was, or was about to become, or was reasonably expected by the cross-respondents to become, a customer of Liberty Commodities Limited (UK).”
Marsh represented to BCC that the customers had “a trading history” with Liberty Commodities; that credit reviews on customers had been done; and that the customers had not defaulted in past trading with Liberty Commodities, the lawsuit alleges.
These additions were submitted by Marsh to former BCC underwriter Greg Brereton to sign. Mr Brereton has previously defended his actions signing insurance policies for the Greensill Group.
BCC said that the customers named in documents submitted by Marsh were not in fact customers, or were expected to become customers, of Liberty Commodities, and that the Greensill Group had not done credit checks on them.
It also alleges that the Greensill Group had either not reviewed the customers’ trading history, or were aware that the customers did not have trading histories with Liberty Commodities, and that it would not have executed and issued the customer endorsements if it had known these matters.
BCC said that the Greensill Group knew and intended that the insurer would rely on “the completeness” of disclosures.
It is seeking damages equal to any amount that it may be required to pay after the claims brought against it, as well as costs, and has asked that certain trade credit insurance policies that it issued be set aside or not enforced.
GFG’s Mr Gupta has previously confirmed in a 2021 letter to the Financial Times that “many of Greensill’s financing arrangements with its clients, including with some of the companies in the GFG Alliance, were ‘prospective receivables’ programs, sometimes described as future receivables”.
“As part of those programs, Greensill selected and approved companies with whom its counterparties could potentially do business in the future,” Mr Gupta wrote.
“Greensill then determined, at its discretion, the amount of each prospective receivables purchase and its maturity.”