Greensill & SoftBank: The Supply-Chain Finance Crackup (2021) - QuickFinanceStories

It sounded boring. Supply chain finance. Paying invoices early for a small fee.

What could go wrong? Everything. This is the story of Greensill.

Greensill Capital had a simple pitch. We pay your suppliers today. They give us their invoices.

We package them into bonds. Everyone wins. SoftBank loved it.

They invested $1.5 billion. Greensill grew fast. But there was a problem.

In early 2021, key insurers refused to renew their coverage.

Some of those invoices weren't real. Future receivables. Projected revenue.

Companies that might pay someday. Or might not. It all depended on one thing: insurance.

Insurers guaranteed the bonds would pay out. Investors trusted the insurance. The whole system ran on that trust.

Then the insurers said no more. In early 2021, key insurers refused to renew their coverage. Without insurance, nobody would buy the bonds.

Without buyers, Greensill couldn't raise cash. Without cash, the whole model collapsed. Credit Suisse froze $10 billion in Greensill-linked funds.

Clients scrambled for money. Greensill filed for insolvency in March. SoftBank wrote off its investment.

Jobs disappeared. And regulators started asking hard questions. The lesson?

Complex financial products work until they don't. And when trust evaporates, it evaporates fast.