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Grant Thornton has said it expects to earn £46mn in fees for running the administration of collapsed supply chain finance company Greensill Capital, making it one of the most costly UK insolvency processes in recent years.
The accounting firm told Greensill creditors last month that it expects to charge a further £8.5mn in fees in the year to March 2025, according to a report filed at Companies House, taking the total cost of the administration to £45.6mn over four years.
The fees highlight the complexity of unwinding the company founded by Australian financier Lex Greensill in 2011.
The 2021 collapse of the business triggered a political scandal when it emerged former prime minister Lord David Cameron, now foreign secretary, had lobbied ministers to allow Greensill wider access to state-backed emergency Covid-19 lending schemes while he was working as an adviser there.
Other expensive UK insolvencies include the administration of collapsed FTSE 100 healthcare operator NMC Health — a much larger company than Greensill by revenues — for which Alvarez & Marsal expects to net fees of more than £70mn. PwC was also paid more than £50mn for handling the insolvency of defunct outsourcer Carillion.
While administrators are typically paid out of the funds belonging to the insolvent company, Credit Suisse, a major Greensill creditor, has been contributing a special fee to keep the supply-chain finance lender operating in administration.
Greensill’s collapse trapped $10bn of assets in supply chain finance funds run by Credit Suisse. The Swiss bank had persuaded 1,200 wealthy clients to invest in the funds, which were sold as low risk as they were underwritten by insurance contracts. But when insurers decided not to extend Greensill’s cover in 2021, the business went under.
Last month, Credit Suisse, which has since been taken over by its former rival UBS, provided an update on its efforts to recoup the billions of dollars lent by Greensill on behalf of its clients.
The bank now expects this process, which could last until at least 2031, to cost $321mn, up from a previous estimate of $291mn. The costs will be born by the fund investors.
Lawyers’ fees account for just over half of the cost, with another third paid to insurance advisers. The bank disclosed that about $19mn is being spent on “Greensill servicing costs” to keep the business running and try to ensure investors are repaid.
Grant Thornton previously supplied restructuring advice to Greensill in 2020 and has also advised GFG Alliance, Sanjeev Gupta’s metals group. GFG’s defaulting on $5bn of debt hastened Greensill’s demise.
The accounting firm previously said that before accepting the administration mandate it had satisfied itself that there was “no threat to its independence as a result of any prior relationships”.
It expects to carry out more than 12,000 hours of work on the Greensill administration during the 12 months to March 2025.
Grant Thornton said: “Having been appointed in March 2021, the administrator’s fees are wholly commensurate with an insolvency of this scale, complexity and longevity.”
