Artha: Journal of Business and Finance

Green Sill Capital Fiasco: A Recipe for Disaster & Deceit

Anil Kumar Pandey

Acharya Bangalore Business School

Keywords: Financial innovation, business failure, firm growth, working capital management, supply chain finance

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Abstract

An expert in the field of supply chain finance, Greensill Capital successfully brought out uninterrupted financial innovations to meet the demands of its large number of customers’ need for financing. In the recent times, the company filed for bankruptcy. This news has put its essential and primary customers, namely, GFG Alliance and Liberty, the metals and trading groups, in danger. These companies have a high growth rate and hence need funds to support such growth. Large amount of funds can be consequentially obtained by converting factorized receivables into securitized package which is an example of financial innovation. To deploy such funds, Greensill needed to find new customers or finance the existing ones. The COVID- 19 pandemic further delayed the process. This case throws light over many topics relating to financial strategy and financial instruments like reverse factoring, securitization, insurance, and the relationship with banks. This case also showcases the significance of business ethics. The data presented in this case study is secondary.

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Author Biography

Anil Kumar Pandey, Acharya Bangalore Business School

Anil Kumar Pandey, Acharya Bangalore Business School

An expert in the field of supply chain finance, Greensill Capital successfully brought out
uninterrupted financial innovations to meet the demands of its large number of customers’ need
for financing. In the recent times, the company filed for bankruptcy. This news has put its
essential and primary customers, namely, GFG Alliance and Liberty, the metals and trading
groups, in danger. These companies have a high growth rate and hence need funds to support
such growth. Large amount of funds can be consequentially obtained by converting factorized
receivables into securitized package which is an example of financial innovation. To deploy
such funds, Greensill needed to find new customers or finance the existing ones. The COVID-
19 pandemic further delayed the process. This case throws light over many topics relating to
financial strategy and financial instruments like reverse factoring, securitization, insurance, and
the relationship with banks. This case also showcases the significance of business ethics. The
data presented in this case study is secondary.

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References