Legal Analysis – Judgment handed down in Greensill case between Credit Suisse and Softbank

Lord Justice Miles has today handed down his judgment in the case of Credit Suisse Virtuoso SICAV-SIF & Anr -v- Softbank Group Corp. & Ors [2025] EWHC 2631 (Ch).

Charles Russell Speechlys and Daniel Lewis of Wilberforce Chambers acted for the Seventh Defendant, Greensill Limited, which is a company in liquidation acting by its joint liquidators, Geoffrey Rowley and Paul Allen of FRP.

Greensill Limited was part of the Greensill Capital group of financial services companies founded by Lex Greensill, which collapsed into insolvency in 2021. Charles Russell Speechlys has acted for the liquidators of Greensill Limited, in relation to various actions, since July 2021.

Background

The case concerns $440m of funds which Greensill Limited lent to Californian construction company Katerra Inc, which itself was backed by various Softbank group companies.

The First Claimant – a sub-fund of Credit Suisse – had invested in outstanding loan notes (referred to as the “Fairymead Notes” in the judgment) with a face value of $440m. The intended security for the Fairymead Notes was a suite of participation and enforcement rights, ultimately in favour of the First Claimant, which was underpinned by the $440m loan from Greensill Limited to Katerra.

In December 2021, Greensill and Softbank entered into a series of transactions (referred to as the “Impugned Transactions” in the judgment), which left Greensill Limited with no assets and rendered the Fairymead Notes valueless.

The First Claimant sought relief under section 423 of the Insolvency Act 1986 (‘transactions defrauding creditors’) on the basis that Softbank was culpably involved in bringing the Impugned Transactions about. Softbank denied that the Claimants were entitled to relief primarily on the basis that, a month prior to the Impugned Transactions, the Softbank group provided $440m to the Greensill group on the understanding (which was not explicitly stated in the transaction documents) that the Greensill group would use those funds to repay or repurchase the Fairymead Notes. The Greensill group ultimately did not use the funds for that purpose.

No substantive relief was sought by or against our client, Greensill Limited, which was included as a defendant principally because the First Claimant sought relief as a “victim” of the Impunged Transactions for the purposes of section 423. The Greensill group also held key documents for the purposes of disclosure.

Decision

Greensill Limited took the position that the Impugned Transactions were at an undervalue, which the Judge agreed with. Greensill Limited took no substantive position on culpability or the appropriate relief. 

It was held in Sequana that it is likely to be an exceptional case where relief will not be ordered despite it being found that there has been a transaction at an undervalue.

The Judge (Lord Justice Miles) ultimately denied relief to the Claimants, primarily because he held that Softbank did not know or expect that the Impugned Transactions were entered into for the purpose of prejudicing the First Claimant’s rights under the Fairymead Notes. The Judge found that Softbank believed in good faith that the $440m injection of liquidity would be used to pay the Fairymead Notes and "internalise" the debt.

Interestingly, the Judge considered that in the exercise of his discretion as to whether to grant any relief against one of the specific Softbank entities (for a far lower sum of c.$11m) he should bear in mind that the shares in Katerra Inc subsequently became worthless – something he described as being akin to “an extreme case of market fluctuation”. 

The decision is a notable example of where a Judge has found that a transaction constitutes a ‘transaction at an undervalue’, but ultimately declines to award a remedy; in this case on the basis that reinstatement of the debt claim and related security against Katerra Inc would not be an appropriate exercise of the Court’s restorative jurisdiction due to Softbank acting in good faith, and Katerra Inc’s subsequent insolvency rendering its shares worthless.

Lord Justice Miles emphasised that the Claimants were not at fault (as asserted by Softbank) but was less complimentary as to the conduct of Lex Greensill.

It is not yet known whether the Claimants will seek an appeal, but nonetheless this judgment is likely to provoke discussion as to the intersection between the judicial finding of a transaction at an undervalue / putting assets beyond the reach of creditors, yet an unwillingness to grant relief for that transaction because the recipient was acting in good faith and the value of the asset had, in the learned Judge’s view, reduced to nil.

Our team

The Charles Russell Speechlys legal team was led by Partners James Hyne and Joseph Evans, with support from Senior Associate Jamie Tilling and Associates Georgina Bernard and Quentin de la Bastide.