Grant Thornton expects to earn £46mn from the administration of Greensill Capital. This is one of the costliest insolvency processes undertaken in the UK.
According to a report filed with Companies House last month, the accounting firm informed Greensill creditor that it expected to charge an additional £8.5mn of fees in the next year, which will bring the total cost to £45.6mn for four years.
The costs of dissolving the company, founded by Australian financier Lex Greensill in 2011, are complex.
When it was revealed that Lord David Cameron, the former foreign secretary and now prime minister, had lobbied Ministers for Greensill to have greater access to emergency Covid-19 loan schemes backed by the state while he worked as an advisor there, a political scandal erupted.
Alvarez & Marsal is also expected to charge more than £70mn for the administration of the collapsed FTSE100 healthcare operator NMC health, a company with revenues much greater than Greensill. PwC received more than £50mn in fees for the administration of the defunct outsourcing company Carillion.
Credit Suisse, one of Greensill’s major creditors, pays a special fee for the lender to remain in administration.
Greensill collapsed, trapping $10bn in assets held by Credit Suisse’s supply chain finance funds. The Swiss bank convinced 1,200 wealthy investors to invest in funds that were sold as low-risk because they were covered by insurance contracts. Greensill went bankrupt when insurers refused to renew its cover for 2021.
Credit Suisse, now owned by UBS after being taken over by their former rival, gave an update last month on its efforts in recouping the billions of dollar loans made by Greensill for its clients.
This process could take until 2031. The bank’s estimate was $291mn. Investors will bear the costs.
Just over half the costs are attributed to lawyers’ fees, while another third is paid to insurance advisors. Bank disclosed that approximately $19mn was spent on “Greensill Servicing Costs” to keep Greensill running and to try to ensure investors get repaid.
Grant Thornton has previously provided restructuring advice to Greensill 2020, and also advised GFG Alliance (Sanjeev Gupta’s metals group). Greensill’s downfall was hastened by GFG defaulting on $5bn in debt.
Before accepting the mandate, the accounting firm said it was satisfied that “no prior relationship” would threaten its independence.
During the year up to March 2025, it expects to work more than 12000 hours on the Greensill Administration.
Grant Thornton stated: “Having appointed the administrator in March 2021, fees are entirely commensurate to an insolvency this size, complexity, and duration.”
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