Liberty Disputes Grant Thornton Claim for Payments from Clients
Argus reported that Liberty Steel has told customers to continue making payments to it, rather than Greensill administrator Grant Thornton. Liberty
Argus reported that Liberty Steel has told customers to continue making payments to it, rather than Greensill administrator Grant Thornton. Liberty noted in the letter that the court order Grant Thornton sent to customers just confirmed it was the administrator of Greensill, and did not compel customers to pay the administrators directly. Liberty Chief Commercial Officer Mr Michael Horan wrote “We dispute Greensill's right to send these notices to our customers and we are engaging with Grant Thornton as a matter of urgency in relation to them. Our main concern at the current time is our employees and customers such as you and we are doing everything possible to stop actions by Greensill that we consider damaging to our business and our customers.”
Grant Thornton had sent a letter to Liberty customers saying they should make payment direct instead, rather than paying Liberty. The Greensill administrator is concerned the cash would be used within the business, given current working capital constraints, rather than being passed on.
Under its receivables programme with Greensill, Liberty was the collection agent, which is atypical for supply chain finance arrangements. This meant Liberty would take collection from its customers, even though it had already sold the invoices to Greensill, and then repay the money. Liberty often repaid Greensill a month or so after receiving customer payment, which was known as the stretch by some within the company.
The wrangling between the parties has presented a headache for customers, some of whom are consulting external legal advice as to how to proceed.
Greensill Capital while filing for administration on 8 March had announced “Chris Laverty, Trevor O’Sullivan and Will Stagg of Grant Thornton UK LLP were appointed as joint administrators of Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited on 8 March 2021https://d1e00ek4ebabms.cloudfront.net/production/fdaf71ee-d817-4c4b-8018-f3c9cccaab0c.jpg