Credit Suisse says it will make another repayment to investors in its Greensill supply chain funds, but how much of their total stakes investors will eventually have returned remains unclear.

 Troubled Swiss bank Credit Suisse will repay investors in its closed supply-chain funds another $400 million in the first half of August, it said in its second-quarter results on Thursday.

The bank said this would take the amount recovered so far to 66 percent of net asset value as of February 25.

Investors held around $10.1 billion in the funds when they were closed in March following the collapse of U.K-based supply-chain specialist Greensill Capital which used money from the funds to lend to its clients.

Flow slowing

The latest announcement shows the repayments are slowing. In early July, the bank refunded $750 million to investors in the funds taking the total repaid at that point to $5.6 billion after around $4.8 billion were refunded fairly quickly.

Even with the August repayment, the around 1,000 investors will still be around $4 billion out of pocket. In Thursday’s statement, Credit Suisse offered them little comfort.

Focus Areas

Of the remaining funds still to be repaid $2.3 billion are from the so-called focus areas.

These consist of three companies: metals magnate Sanjeev Gupta’s GFG Alliance ($1.2 billion); Bluestone Resources ($690 million), a coal mining company owned by the governor of the U.S. state of West Virginia, Jim Justice; and Katerra ($440 million), a construction start-up backed by Softbank’s Vision Fund, which filed for protection from its creditors in June.

In the statement, Credit Suisse merely said: «Advanced negotiations with debtors on restructuring to maximize recovery; all available recovery avenues will be pursued.»

GFG

Gupta’s GFG Alliance was the largest borrower from Greensill Capital, and initially the Swiss bank pursued him aggressively for money by taking steps against his companies, even demanding some be liquidated in the hope that it would be able to repay its fund clients.

However, at the end of May Credit Suisse reached a standstill agreement over the Liberty Primary Metals steelworks in Australia, a GFG unit which owed the Greensill funds $1.2 billion.

In the meantime Gupta has been making various moves to shore up GFG financially. Early this month GFG unit Liberty Steel agreed to sell its French assets to Germany’s Saarstahl for 40 million euros ($47 million) and the taking on of debt of 45 million euros. A Saarstahl spokeswoman told finews.com that the Greensill creditors were not involved in the transaction.

GFG is also being pursued by other creditors. On Wednesday, «Bloomberg» (behind paywall) reported that private equity group American Industrial Partners had moved to take control of one of the Dunkirk aluminum smelter in France. AIP owns most of the plant’s senior debt, and the could derail a refinancing plan Gupta agreed with commodities giant Glencore.

Bluestone

The «Wall Street Journal» (behind paywall) reported that there had been talks between representatives of Justice’s companies and Credit Suisse. The WSJ cited a source familiar with the talks as saying one of the options under being considered was raising output at coal mines operated by Bluestone.

Technically this would not conflict with the bank’s pledge to reduce its commitment to coal. A Credit Suisse spokesman told finews.com this only applied to thermal coal, mainly used for power generation. Bluestone produces metallurgical coal used to make coke for steel making.

Lawsuits

Bluestone owner Justice is also involved in litigation with a U.S. bank, according to local media reports. 

Virginia-based Carter Bank and Trust have filed a court case seeking more than $58 million from defaulted loans made to two Justice-owned companies – the Greenbrier Sporting Club, and the Oakhurst Club.

U.S. media reports cite court records as saying the $58 million is a portion of the $368 million Justice companies owe the bank.

The reports also say Justice and his companies launched a lawsuit against Carter on May 31 over millions of dollars in loans that were coming due the next day. That lawsuit said the bank grew restrictive, the financial relationship grew toxic, and that the bank wouldn’t cooperate on refinancing loans coming due for properties owned by the companies.

Insurance

Credit Suisse said in its earnings report that it would also continue to work on filing insurance claims with the aid of Greensill Bank.

The problem for Credit Suisse is that it has few rights because it isn’t the policyholder, simply the so-called «loss payee». Greensill was the policyholder.

Tokio Marine, a Japanese insurer came to own the policies through its acquisition of Bond & Credit Company in 2019.

A Sydney-based executive, Greg Brereton, underwrote much of the vital credit insurance to Greensill at BCC. After the acquisition, Tokio Marine fired Brereton after finding he had exceeded his risk limits by underwring as much as A$10 billion ($7.6 billion) for Greensill.

«We continue to assess the validity of cover extended to Greensill,» a spokesman for Tokio Marine said in June. The collapse of Greensill itself doesn’t crystalize any exposure for the insurer, he said. «Tokio Marine will continue to assess the validity of the cover extended to Greensill.»

Fraud Probes

The insurance position has been further compounded by investigations into potential fraud surrounding the collapse of Greensill Capital.

German financial regulator Bafin has filed a complaint with prosecutors about over suspected balance sheet manipulation at Bremen-based Greensill Bank.

In the U.K. the Serious Fraud Office launched an investigation into the financing of Gupta’s metals empire, including its links to Greensill Capital.

In the U.S., Bluestone filed a lawsuit against Greensill Capital in March, alleging fraud.

Were fraud to be proven it could invalidate any insurance policies and the investigations will make insurers unwilling to payout until their outcome is clear.