The administrator for a German bank owned by Greensill Capital is suing Zurich Insurance for losses it claims were covered by the Swiss insurer. Zurich said it will contest the action.
Zurich Insurance is being sued in a London court by the administrator of Germany's Greensill Bank which is seeking $250 million in damages, according to a «Financial Times» (behind paywall) story Tuesday.
Greensill acquired a Bremen-based bank in 2014 and renamed it Greensill Bank, which extended loans backed by supplier invoices. The loans were subsequently bundled and sold as investments. Greensill, founded by Lex Greensill and David Cameron, the former UK prime minister, failed in 2021.
At issue are payments made by Greensill to Liberty Commodities that were thought to be collateralized by money owed to Liberty, with Greensill assuming the obligations. The administrator is claiming it failed to receive money owed to it that was insured by a policy the bank had with Zurich.
The Zurich Defense
The lawsuit claims the Swiss insurer would indemnify Greensill Bank against certain losses occurring between October 2018 and March 2021, with Greensill exercising the Zurich Policy in March, for which it wasn't paid.
For its part, Zurich says it «has meritorious defenses to the policy and the claims raised and will vigorously contest the action,» according to the story.
Other insurers are being sued by Greensill in courts in Australia. If those are successful, any payments resulting from those cases will offset the money sought from Zurich.
The demise of Greensill is one of the factors that helped bring down Credit Suisse.
