Credit Suisse Group AG’s effort to recover $10 billion invested in loans from Greensill Capital faces roadblocks because of a complicated structure that makes it difficult for the parties to agree on who owns the loans, according to people familiar with the matter.
A “double trust” structure means that investors in Credit Suisse’s funds have rights to cash flows from the loans held in one trust, but rights to the underlying loans are held in a separate trust, people familiar with the trusts say. These include loans to Greensill’s biggest borrower, GFG Alliance, the metals empire controlled by British-Indian tycoon Sanjeev Gupta.
The emergence of the double-trust issue has the potential to complicate Credit Suisse’s ability to recover money for the more than 1,000 investors in its supply-chain funds. Investors include pension funds, corporate treasurers and other professional investors.
Credit Suisse said it has so far returned $3.1 billion to investors. More cash has recently flowed into the funds as Greensill’s borrowers pay back some of the loans, according to a person familiar with the matter. The bank has said it would return more money to investors in mid-April.
The problems with Greensill comes at a difficult time for the Swiss bank while it deals with the liquidation of Archegos Capital Management. The bank has said it expects to take a loss on both Greensill and Archegos.
