FL-2022-000014 - [2025] EWHC 2631 (Ch)

On 3 January 2021 at 7:28 pm, Mr Greensill sent an email to Shane Galligan at CSAM which included the following:

“- SoftBank Vision Fund Companies

o The concentration as at 31 December exceeded the year end target — although we have reduced by more than $300mm in the past 30 days;

o This target will be met simply through the amortisation of the [redacted] and Katerra programmes over the next 90 days. [redacted] Katerra has been restructured, but is 100% covered by our insurances and will be paid in full on or before 31 March 2021.);

o REQUEST

■ No further purchases of SCF assets from Vision Fund companies until the concentration target is met; and

■ All Katerra notes will be repurchased early upon closing of the abovementioned [redacted]ed equity raise. (January 2021).”

On 4 January 2021 Mr Greensill set out in an email to Eric Varvel copying Michel Degen with a different proposal, which he acknowledged was also “counter to the agreement struck in the summer of 2020” (i.e. the reduction in the CS SCF’s exposure to SoftBank companies):

“As you are aware, of the dozens of customers in the SCF Funds, we have been able to bring all but two into line with the concentration limits agreed in Summer 2020. Clearly COVID, which has not panned out as we all reasonably anticipated back in the summer, has had a material impact on our ability to either refinance or distribute some of our programmes’ notes to other investors.

As you are no doubt aware, we are presently concluding a significant strategic equity raise, in excess of USD$1.5bn, which we and our advisors, Credit Suisse and Citi, intended to close before 31 December. We had planned to use some of these proceeds on a short-term basis to buy back assets in excess of the concentration limits from the SCF Funds pending onward sale to other investors or held to maturity.

Given the Christmas period, the close has run into January but, on Friday night, the lead investor received in-principle Investment Committee approval to proceed - which is obviously extremely good news. However, there are two conditions on that approval which impacts the Supply Chain Finance Funds and we would be grateful if Credit Suisse would urgently consider same, such that we can promptly proceed to close.

SoftBank Vision Fund Companies

• Outline

○ The concentration as at 31 December exceeded the year-end target – although we have repurchased more than $300mm in the past 30 days;

○ This target will be met simply through the amortisation of the View Glass ($276mm outstanding) and Katerra ($440mm) programmes over the next 90 days:

▪ View has gone public via a SPAC and all notes will be repaid in March. The SPAC triggers the change of control clause on our programme and the notes will be repaid from the proceeds at closing in March 2021. In the interim, the position remains 100% insured; and

▪ Katerra has been restructured, however the fund does not have credit exposure to Katerra. As a multi-obligor receivables programme the credit risk is on multiple customers of Katerra. These notes all run off within the next 90 days and the programme is 100% insured. There will be no performance impact on the SCF Fund.

• Requirement

○ Equity raise cannot close if Greensill is seen as being in “breach” of any SCF Fund rules.

• Proposal

○ No further purchases of SCF assets from Vision Fund companies until the concentration target is met (which will therefore be achieved within 90 days); and

○ All Katerra notes will be repurchased by us early upon closing of the Greensill equity raise, which is expected to complete in January 2021;

GFG

• Outline

o The concentration as at 31 December exceeded the year-end target;

o All assets are 100% insured;

• Requirement

o Equity raise cannot close if Greensill is seen as being in "breach" of any SCF Fund rules;

o A reduction plan for GFG needs to be agreed with the BaFin re Greensill Bank AG. Over the weekend, the BaFin has agreed to lock in a reduction plan with us on a conference call scheduled for tomorrow (Tuesday) afternoon. The BaFin will not agree to a plan that sees the SCF Funds "prioritised" in their GFG reduction vs. Greensill Bank. To that end, we propose to "match" the proportionate reductions of the SCF Funds with those reductions agreed with the BaFin.

• Proposal

o In line with our BaFin plan, we would therefore also propose the following modified amortisations (which would bring the fund into line with the concentration target by 30 June 2021):

■ $200mm - January 2021 - at closing of the Greensill equity raise;

■ $100mm - 31 March 2021; and

■ $150mm - 30 June 2021.

o We are very confident that the March and June reductions can be achieved, given the multiple options are that being actively progressed:

■ Within the EU, GFG is eligible for more than EUR700mm in government guaranteed COVID loans and Greensill is presently executing these and they will all close in Hl 2021;

■ The GFG notes (and their embedded insurance) are being rated. Once the ratings are completed in February we will be able to sell same to our regular fixed income investors (who today only buy rated notes or from rated counterparties and do not benefit from insurance) and tender some of the securities to the ECB under the Pandemic Emergency Purchase Program (PEPP);

■ Convert several of our existing multi-obligor receivable programmes into traditional securitisations, which we will sell to the 51 banks who today buy such securities from us; and

■ GFG have initiated the IPO of their highly profitable, 100% owned, Australian subsidiary, LibertyOneSteel, which should achieve an EV in excess of USD$2bn and generate material liquidity for the group. We are very aware that these two proposals are counter to the agreement struck in the summer of 2020 – but trust you will understand that the world is not today what we all reasonably expected it to be then. What we have tabled is the best we can do and, if these two proposals are approved by Credit Suisse, then we will provide a board minute from Greensill Capital confirming formalisation of same.

Given the time sensitivity of this, your speedy response would be sincerely appreciated so that we can finalise our discussions with BaFin and the closing of our milestone equity round.”

Mr Varvel responded the same day as follows:

“Lex I really believe the right way to approach this for both of us is to complete the trades that have been confirmed. This will keep us both on-side with our Board, Finma (as we have committed to both as you know) and the market overall.

I believe the Lex Greensill, and the Greensill corporate, relationship, is important to CS and a proper commercial request through Helman should be put forward.

I have spoken to Lara and Helman and expected this direction and a call tomorrow with Thomas Gottstein to discuss... Again, I do not believe breaking confirmed trades is the right direction.”

Mr Greensill responded to Mr Varvel later on the evening of 4 January 2021:

“I agree with your perspective that this is a broader relationship matter — and have brought the ask to the attention of Helman. Hopefully your fellow members of the group management board will be able to consider our proposal promptly.

Separately, we have checked and there are no matched and confirmed trades in the clearing systems between Credit Suisse and Greensill that are unsettled as of this evening. Therefore, thankfully, there are no trades that would need to be broken if your group management board were to approve what is outlined in my email below.

We hugely value the partnership that has been forged between CSAM and Greensill — and post this capital raise, see us collectively creating still more value with our joint market-leading franchise — delivering financing to the world's supply chains.”

On 5 January 2021, at 7:29am, Mr Degen sent an email to Mr Varvel:

“I think there are following options...

“ A) He gets liquidity from CS or SB / or combination - incl. himself - trades settle - 11.1 and 14.1 - he repays asap after capital increase”

B)

We tell FINMA - we need an extension of 3 months - to execute for various reasons - we reduced already VF related to about 15% ..btw. FINMA asked about VF only... it s not a credit issue - we are in line with prospectus and current guidelines - funds are growing - but we cannot accept anything longer than March31, 2021

- his Gupta amortization proposal does not work - we should reject

Both options shall be approved by Lara / Thomas.”

The people referred to in the last line were Lara Warner, Credit Suisse’s Head of Risk and Thomas Gottstein, its CEO.

On 5 January 2021 at 9:22am Mr Varvel emailed Mr Degen, saying:

“I spoke to Lex. He maintains that the trades with us bringing us down from 15% to 5% were put in the market by us but now accepted by his team. He claims he has confirmed this with his legal counsel. I told him I have heard differently.

He realizes that this puts us in a difficult position but he needs/wants support. I told him we are all very bruised and his request should not be a pullback from commitments to CSAM but rather should be a new transaction.

He continue to push for 3 more months...

Question — what percentage was vision fund paper when we made the commitment — in other words, how much have we reduced if these trade don’t close and we have 15%?

Also — I think in 3 months these trades naturally roll off anyway and we will be at 5%?

Are we currently in line (at 15%) with what we have told our investors in terms of guild lines?

Lex doing this really puts us in a difficult position... I plan to talk to Thomas [Gottstein] tonight and see what he thinks.”

At about the same time (at 09:39am), Mr Varvel also emailed Mr Helman Sitohang of Credit Suisse:

“Helman — I just spoke again to Lex. Does it make sense for you, Thomas, Lara and I to discuss?

I cannot unilaterally agree anything/or break commitments without Thomas’s agreement (and I do believe we have confirmed trades with Lex) — further — even if Thomas is ok, I believe there will be some negative FINMA and Board Blowback to be considered against sizable commercial considerations of losing Lex as an important client.

As you and I both know — sometimes when there is a crisis there is an opportunity...

Lex wants our view by tomorrow sometime. I am headed to Ny now from Paris. Can you set up a call to discuss?

Always something!”

Mr Degen forwarded to Mr Varvel the email from Mr Jesensky (Greensill Group) on 31 December 2020 referring to the Secondary Trade that were sent across by the Greensill Group, to which Mr Varvel asked “So he is breaking the trades? Is he suggesting he is not breaking the trades for some technical reason?”.

Mr Degen responded:

“Sure.. just because they did not instruct the trades.. does not mean we did not agree…we have various mails …

Assume he does not pay.. we are still long and it will take time to mature the trades….. we are not in a better situation.. as we have to tell FINMA anyway that we need some more time…”

Mr Degen commented in capital letters on Mr Varvel’s previous email recording his conversation with Mr Greensill:

“I spoke to Lex. He maintains that the trades with us bringing us down from 15% to 5% were put in the market by us but now accepted by his team. He claims he has confirmed this with his legal counsel. I told him I have heard differently. – THIS IS NOT TRUE – SENT YOU THE MAIL- THEY (MIDDLE OFFICE OF GREENSILL) JUST DID NOT INSTRUCT THE TRADES”.

Mr Degen forwarded this email to Mr Greensill (without copying anyone else) saying “Not really correct what you are saying.. we agreed on these trades – your team just did not instruct… !”. Mr Degen forwarded this exchange to Mr Varvel.

In an email to Mr Degen on 5 January 2021 Mr Varvel referred to an upcoming call with Thomas Gottstein in which he was planning to explain the “natural roll off schedule (Over the next 3 months) of the positions Greensill is suppose [sic] to purchase but is suggesting they do not”.

On 5 January 2021 Mr Mathys said in an email to Mr Degen:

“As we have already traded the securities on 31.12., they are not in Aladdin anymore. What we do not is taking fund accounting data and get the maturities out. However, installment payments will therefore not be included.

These trades have to go through, we have talked to clients about the new guidelines as per end of the year, especially the biggest client in the fund. I do not see how to explain to client in a credible way. Lex always told us that all trades done per end of the year.”

On 7 January 2021 Mr Degen sent an email to Mr Greensill informing him of CSV’s response to his proposals:

“The following has been discussed and agreed with our CEO and EXB and needs your confirmation latest by tomorrow 10am CET - before we inform FIN MA about the extension of the new guideline validation until March 31, 2021.

Vision Fund related transactions […]

- Katerra (Multi obligor program of 438mn) — Notes mature on March 15, 31 2021 or latest be bought back by GS by March 31, 2021 (settlement day) - maturities before March 31, 2021 will not be rolled over

- VF related notes needs to be below <= 5% as of March 31, 2021— per each SCF fund”.

Mr Greensill responded to Mr Degen later on the evening of 7 January 2021, noting “Thank you. We accept those terms”.

On 8 January 2021 there was a call between CSAM (Lara Warner, Eric Varvel, Beat Sigrist) and FINMA (Simon Brönnimann, Marc Ribes). It took place between 16:00 and 16:30 and there is a note of it circulated amongst CSAM by Beat Sigrist on 11 January 2021:

“Key discussion points

LW and EV proactively informed FINMA about the concentration risk situation in relation to the SoftBank Vision Fund sponsored papers.

The concentration risk of CS was reduced to 16% by year end, but the internal target of 5% set by the Group CEO was not met.

It was noted that no regulatory breach was associated with this internal guideline breach. The internal target of 5% was also not communicated to the public.

Very late in the process, Greensill flagged that they need additional time to complete the intended transaction which led to the internal target breach. This was a surprise to CS and FINMA was provided with the explanation given to CS by Greensill.

CS clearly expressed their disappointment to Greensill and put severe pressure on them to complete the transaction, which will be documented.

The Bank’s following action plan was discussed between T. Gottstein, H. Sitohang, L. Warner and E. Varvel. In case Greensill is unable to complete the transaction, AM has put a plan in place that can be executed unilaterally and without any market disruptions. Greensill has been informed that CS will not re-new their programs (assuming Greensill does not do anything) and will run down the respective funds. The notes of two investors will not be renewed in March (i.e. run off) and the investors will be informed by CS. Hence, the run-off exposure is targeted to be 7 % by mid-March and AM has been asked to run down another 2 % in the next three months.

CS noted that the preferred option is that Greensill solves the issue and at current, CS does not have any reasons to believe that Greensill won’t live up to their commitments. However, as Greensill did not perform, the two-pronged approach has been agreed.”

Mr Greensill and Mr Haas confirmed separately in internal correspondence on 11 January 2021 that the Secondary Trade should be cancelled. The cancellation was confirmed by Greensill Middle Office on 12 January 2021.