SoftBank, the Katerra notes and the $440 million: what happened?

analysisSoftBank became a shareholder of the Greensill group in 2019. According to the High Court in [2025] EWHC 2631 (Ch), SoftBank Vision Fund L.P. (SVF1) invested about $800 million in Greensill Capital Pty Limited (GCPL), the group parent, in May 2019: about $527 million as convertible loan notes, debt that can be converted into shares, and the rest as common equity, which took SVF1's equity ownership of GCPL to 9.9%, below the 10% level that would have triggered regulatory consequences for equity control of Greensill Bank AG. A press report (May 2019), citing unnamed people close to the deal, had stated that the investment would double Greensill's valuation to about $3.5 billion and give the fund a stake of between 15 and 20 per cent, and that General Atlantic had invested $250 million less than a year earlier at a valuation of $1.64 billion; those figures are not established by the official record, and the stake differs from the 9.9% equity ownership recorded by the court. SVF1 invested further in GCPL through SVF Wyatt (Singapore) Pte Ltd: a convertible loan note of about $180 million issued on or around 23 September 2019, and conditional share purchase agreements of 18 October 2019 (about $444 million for 186,136 G Class shares and about $16 million for 7,152 G Class shares) and 6 November 2019 (about $30 million for 12,675 G Class shares), each share transfer being subject to the approval of BaFin, the German financial regulator. The annual report of Greensill Capital (UK) Limited (GCUK) for the year ended 31 December 2019 states that during 2019 SoftBank invested an aggregate $1.46 billion in the group parent company and became a significant shareholder of the group. ^{1 2 3 4}

analysisSoftBank also supported Greensill's lending to companies backed by its Vision Fund. Under a Credit Enhancement Programme, SoftBank Group Corp. (SBG) provided credit support for certain financings by GCUK of Vision Fund portfolio companies through credit default swaps, contracts that underwrote the borrowers' bankruptcy risk, with the Greensill group absorbing any shortfall up to $100 million in any year (the 'Greensill First Loss'). By October 2019 GCUK had agreed such swaps with Cayman Project 2 Limited, an SBG subsidiary, for its facilities to View, Inc., Fair Financial Corp, Guazi Limited and OYO Hospitality UK Limited, in each of which SoftBank Vision Fund L.P. had invested. A draft application to the credit committee of GCPL dated 29 September 2019 described a revised Credit Enhancement Programme as a joint venture between an SBG special purpose vehicle and GCUK; on 2 October 2020 SBG informed Greensill that it was terminating the process for establishing that joint venture. ¹

analysisKaterra was a Vision Fund portfolio company: by September 2019 SVF1's vehicle SVF Abode (Cayman) Limited had invested about $1.75 billion in the Katerra group, and when SVF1's investment committee approved a further investment on 5 November 2020, SVF1 owned 47.4% of the equity of Katerra Inc. (Cayman Islands), the group parent. The Greensill group financed Katerra through the Fairymead Multi-Obligor Programme. Katerra group companies sold or purportedly sold receivables, rights to payments owed to them, to Greensill Limited under a receivables purchase agreement of 9 December 2019; under a Participation Agreement of 19 December 2019 Greensill Limited granted its parent GCUK participations in those receivables, which GCUK assigned to Hoffman S.à r.l. and Hoffman to Citibank N.A., London Branch as note trustee, as the intended security for notes originated and administered in England by GCUK and issued by Hoffman through its Compartment MZ. The Credit Suisse (Lux) Supply Chain Finance Fund (the Lux fund), a sub-fund of Credit Suisse Virtuoso SICAV-SIF, invested in these notes, with a face value of about $440 million, and all of them defaulted when they matured or fell due in March 2021 (another passage of the judgment says on maturity in March and May 2021). The High Court found that Greensill Limited was a link in this securitisation chain, the packaging of receivables into notes sold to investors: Katerra was a secured borrower from Greensill Limited, which had to pay participation amounts equal to Katerra's payments to GCUK, and those obligations were assigned to Hoffman so that they would fall outside Greensill Limited's insolvency estate in any insolvency of the Greensill group. Greensill Limited had no assets other than its claims against Katerra and no employees, and Lex Greensill, a trained solicitor, appreciated these facts. ¹

analysisWhether SoftBank also stood behind the Katerra facility was disputed. SBG gave the Greensill group no written guarantee or credit default swap for the funding provided to the Katerra group under the December 2019 receivables purchase agreement. The High Court found that the Greensill group and SBG differed over whether SBG had committed to credit support for the facility: Lex Greensill contended, including in emails of 19 December 2019 and 11 October 2020, that Masayoshi Son had given a personal commitment, SBG contended that there was no binding agreement, and Lex Greensill accepted in evidence that there was no written agreement, explaining that the group was naturally advancing the strongest position it could in the continuing negotiations over the Credit Enhancement Programme. The court found that the parties compromised this dispute in the negotiations leading to the November 2020 agreements, but that those negotiations were primarily driven by the pressing need to rescue Katerra from collapse and to salvage the Greensill fundraising, which required Katerra's indebtedness under the receivables purchase agreement to be addressed. SBG's 2020 investment in the Credit Suisse supply chain finance sub-fund gave rise to further requests: when GCPL sought extensions of the redemption timetable, SBG asked in exchange for shares in GCPL and for GCPL to sell its corporate jets and be audited by a Big 4 firm, requests the court recorded as uncontentious facts. In an internal email of June 2020 quoted in the judgment, Rajeev Misra of SoftBank questioned Lex Greensill's reliability and proposed a high penalty of 3% extra GCPL equity unless the auditor was upgraded by November, all aircraft were sold within four months and the December quarter-end audit was done by a Big 4 firm, and on 6 August 2020 Masayoshi Son emailed Lex Greensill urging cost cuts because the group's funding was still fragile. Both emails are internal or bilateral communications; the court found that Rajeev Misra wrote in frustration at the repeated extension requests, and it did not consider that there was a consistent or settled view within the SoftBank group that Lex Greensill was not to be trusted. In terms proposed by Lex Greensill on 14 October 2020, Greensill would sell the private jets before its IPO rather than by December 2020; at the trial, Lex Greensill's evidence that the SoftBank defendants had imposed very tough terms concerned personal obligations relating to the private jets and a personal guarantee that Lex Greensill had had to concede. SBG's investment in the sub-fund had been fully redeemed by 16 July 2020; among the agreements of 10 November 2020 an amendment deed cut the strike price of GCPL shares under its September 2019 convertible loan note to a SoftBank Vision Fund vehicle from $2,385.10 to $1,974.75 in return for SBG's delayed redemption timetable, and GCPL and Lex Greensill undertook that GCPL would sell its corporate jets, failing which a SoftBank fund would receive GCPL shares. ¹

analysisThe November 2020 agreements grew out of Katerra's difficulties. On 13 and 14 October 2020 Tom Cheung of SoftBank Investment Advisers and Lex Greensill exchanged proposed terms under which SBG would repurchase the Fairymead (Katerra) notes at par, $440 million, in return for warrants, rights to subscribe for shares, over shares in GCPL; the proposal evolved into a $440 million injection into GCPL. The High Court found that it was Lex Greensill who sought to persuade the SoftBank defendants to inject the $440 million to prevent a default under the Katerra receivables purchase agreement and to salvage the Greensill fundraising, rejecting the case that SoftBank had imposed the terms ('There was no take-it-or-leave-it moment'). A letter titled 'Katerra Inc. – Summary of Terms' dated 2 November 2020, signed on behalf of Commonwealth Real Estate LP, Katerra Inc. (Cayman Islands) and a SoftBank Vision Fund investment vehicle, made it a pre-closing condition of a proposed investment in Katerra that the indebtedness of Katerra and certain subsidiaries to Greensill Limited, about $440,000,000, be fully discharged for no more than $176,000,000, with releases of claims by Katerra and Greensill. In a draft email of 3 November 2020 prepared for Masayoshi Son, Lex Greensill wrote that SBG and SoftBank Vision Fund 2 should ensure the agreements were executed and the funds transferred to Greensill by Friday 6 November 2020, so that the group would not have 'a disclosure issue' with its incoming equity and debt investors and, 'more importantly', with its insurers covering the Katerra, Fair, View and OYO transactions. ¹

analysisOn 5 November 2020 the investment committee of SoftBank Vision Fund 2 approved a $440 million investment in GCPL convertible loan notes on the terms of a SoftBank Investment Advisers memo, which stated that Greensill anticipated using the proceeds to buy from external investors the notes that had funded the Katerra facility and to manage that risk internally, and that Greensill had hired Credit Suisse and Citibank to arrange a pre-IPO round, a private fundraising ahead of a planned initial public offering, targeting about $1 billion (about $600 million of equity and $400 million of debt); the same day SVF1's committee approved a further $200 million investment in Katerra. On 10 November 2020 SVF II Wyatt Subco (Singapore) Pte. Ltd., an investment vehicle of SoftBank Vision Fund 2, subscribed for the $440 million of notes. That day an Omnibus Deed was concluded between GCPL, GCUK, SBG, Lex Greensill and SVF II Holdings (Singapore) Pte. Ltd., and under a sale and purchase deed (the 'LG Fair Loss SPA') GCPL, as trustee for the Lex Greensill family trust, sold shares in GCPL to SBG; an amended and restated LG Fair Loss SPA of 8 December 2020 gave SBG a longer timeframe for absorbing an additional $50 million first loss and extended the crystallisation date to 15 May 2021. The notes were unsecured and convertible into 86,713 new F shares of GCPL, subject to a German regulatory condition, and the Omnibus Deed recited that, as part of the consideration for them, GCPL would assume any and all losses in respect of the Katerra notes and the Katerra programme. By an amendment deed of 23 December 2020 between SVF II Wyatt Subco, SVF Wyatt (Singapore) Pte Ltd and GCPL, the conversion entitlement was increased to 141,218 new F Class shares. ¹

analysisThe Omnibus Deed also settled earlier arrangements between the two groups. Under clause 2.1 Lex Greensill, GCPL and GCUK released SBG, Vision Fund II and related parties from claims relating to the Katerra programme, the Katerra notes, any credit default swap, guarantee or other credit enhancement for Katerra (or the failure to provide one), and the joint venture, occasionally referred to as Credition Global Limited, that SBG and GCUK had discussed forming to guarantee financings by GCUK and its affiliates of SoftBank portfolio companies. By clause 4.2 SBG waived the 'CDS Greensill First Loss 2020-2021', defined as the annual first loss of US$100,000,000 payable by GCUK under the Credit Enhancement Programme on or before 8 October 2021; the deed defined the 'Katerra Notes' as the notes issued by Hoffman S.à r.l., compartment MZ, backed by payment obligations originated under the Katerra programme. Clause 3 obliged GCPL and GCUK to account to Vision Fund II for any amounts recovered on the Katerra notes or the Katerra programme, to use best endeavours to recover such amounts, and to recover and remit to Vision Fund II at least US$176,000,000 by 31 December 2020, and clause 11.1 required the parties to keep the deed, its existence and the transactions it contemplated confidential. On 4 December 2020 the GCPL board approved a variation removing the obligation to recover and remit $176 million, and the Amended Omnibus Deed entered into on 23 December 2020 by GCPL, GCUK, SBG, Lex Greensill and SVF II Holdings replaced clause 3 with an obligation to remit to Vision Fund II any Katerra recoveries from parties other than the SoftBank entities and any Katerra equity received. ¹

analysisThe $440 million paid under the convertible loan notes was credited to the general account of GCUK on or around 10 November 2020, and GCPL did not use it to repurchase or redeem the Fairymead notes. Internal Greensill emails quoted in the judgment recorded on 18 November 2020 that the cash was 'being used for other stuff', including paying off a Credit Suisse loan, and on 27 November 2020 that the group seemed 'to have gone through all the $440m intended for Katerra having only paid $70m toward it'. Two later accounts break the sum down; the court did not itself determine how each part was used beyond finding that it was not used to repurchase or redeem the notes. An April 2021 email from the Greensill group's external counsel, quoted by the court among the documents, said that $250 million had been paid to Greensill Bank AG to be held as collateral in respect of GFG positions, and that the balance was used as transient asset-purchase liquidity, for example $70 million used on 25 November 2020 to buy assets onto GCUK's balance sheet until 16 December 2020, and as operating liquidity for GCUK, whose monthly operating costs were about $35 million, until the administration. Notes by SoftBank Investment Advisers' chief risk officer of a meeting on 27 January 2021 with Divya Eapen, chief risk officer of the Greensill group, recorded that part of the $440 million had been placed as cash collateral at Greensill Bank and part used by GCUK to buy Liberty notes that could not be sold, itemised as $30 million of insured notes (receivables from Liberty Commodities), $110 million of other Liberty receivables (Rehbein and Seaview), $250 million of cash collateral at Greensill Bank and $80 million of unrestricted cash at GCUK. Those are a counterparty's notes of what the risk officer said, the four amounts together exceed $440 million, and the court made no finding on the breakdown; the same notes recorded that legal counsel and Lex Greensill believed GCUK could use the cash until the maturity of the notes held by Credit Suisse Virtuoso. On 5 January 2021 BaFin blocked withdrawals by the Greensill group from Greensill Bank AG, which affected the $250 million deposited with the bank in November 2020. ¹

analysisIn late November and December 2020 the parties settled how Katerra's debt to Greensill would be released. On 28 November 2020 SoftBank Investment Advisers told the Greensill group's counsel that its principals had confirmed that Greensill would release its security interest over Katerra's CLT facility, pledged under the Greensill–Katerra facility, so that a SoftBank Vision Fund vehicle could fund Katerra on a secured basis. On 29 November 2020 SoftBank Investment Advisers proposed revised steps: amending the $440 million convertible loan note to increase the number of F class shares into which it converts, cancelling Greensill's obligation to pay over $176 million of Katerra recoveries, Greensill forgiving and terminating its $440 million facility to Katerra, and Katerra issuing to Greensill warrants for 5% of its fully diluted equity, to be transferred to SoftBank Vision Fund 2. Jonathan Lane, the group's counsel, replied that this fitted the group's understanding save for the warrant pass-through, to which there was no objection in principle, but that external counsel was needed on fraudulent conveyance risk, the risk of a transfer being challenged as made to defeat creditors. On 1 December 2020 Katerra Inc. (Cayman Islands) issued a $25,000,000 bridge note to SVF Abode (Cayman) Limited, and Greensill Limited agreed with the Katerra sellers to release all liens on their assets under the receivables purchase agreement other than liens on the purchased receivables. On 11 December 2020 the Greensill group delivered the signature pages of Lex Greensill, GCUK and GCPL to the Amended Omnibus Deed into escrow with the group's external counsel, pending SoftBank Investment Advisers' consent to release the Vision Funds' pages. On 12 December 2020 Katerra, SVF Abode (Cayman) Limited and Wolff Principal Holdings LP signed indicative terms for settling claims under Katerra's construction contracts, conditional on SVF Abode investing $175 million in cash and extinguishing $25 million owed to it under the 1 December 2020 promissory note, and on the extinguishment of $440 million principal of indebtedness of Katerra and certain subsidiaries to Greensill Limited in exchange for preferred shares equal to 5% of the fully diluted equity. US antitrust (HSR) approval for SVF1's investment in Katerra was given on 22 December 2020, and on 23 December 2020 SoftBank Investment Advisers consented to release its signature pages on the Amended Omnibus Deed and the amended convertible loan note. ¹

analysisThe group's planned equity raise meanwhile lost its lead investor. After TDR Capital, the lead investor in Greensill's pre-IPO equity raise, indicated by 23 December 2020 that it would not proceed with its planned investment, Lex Greensill asked SoftBank on 23 December 2020 for a $1.5 billion bridge facility; minutes of the GCPL board of 31 December 2020 record that SoftBank declined to provide a bridge facility but would consider an equity investment of up to $250 million alongside other investors, noting that crossing a 50% equity threshold would require it to consolidate Greensill Bank AG, 'a red line'. On 30 December 2020 Greensill Limited, Katerra Inc. (Cayman Islands), its Delaware intermediate holding company and the other Katerra sellers entered into a Contribution and Exchange Agreement (CEA), under which Greensill Limited contributed its claims under the receivables purchase agreement in exchange for 762,144 Series A preferred shares of Katerra Inc. (Cayman Islands); all obligations under the Greensill finance documents were deemed paid and discharged in full, the documents were terminated and all security held by Greensill Limited was released. The same day, by a Share Transfer Agreement (TA), Greensill Limited transferred those 762,144 shares to SVF II Abode (Cayman) Limited, an investment vehicle of SoftBank Vision Fund 2, and SVF Abode (Cayman) Limited, for SVF1, subscribed for 11,416,921 Series A preferred shares of Katerra Inc. (Cayman Islands) for $174,922,250 in cash and the contribution of the $25,000,000 owed under the December 2020 bridge note, shares that the High Court found were worth the $200 million price. By 6 July 2021 the Vision Funds' vehicles held 99.6% of Katerra's equity, SVF II Abode's block amounting to 6.25%. ¹

analysisThe Lux fund later challenged the 30 December 2020 transactions. Credit Suisse Virtuoso SICAV-SIF, for the Lux fund, and GLAS Trust Corporation Limited, as note trustee, sued SBG, SVF II Abode (Cayman) Limited, SVF Abode (Cayman) Limited, SVF Habitat (Cayman) Limited, SoftBank Vision Fund L.P., SoftBank Vision Fund II-2 L.P. and Greensill Limited (in liquidation) in the High Court, Financial List (case FL-2022-000014), under section 423 of the Insolvency Act 1986, under which a court may make orders restoring the position after a transaction at an undervalue entered into for the purpose of putting assets beyond the reach of creditors or otherwise prejudicing their interests. Greensill Limited, acting by its liquidators, took a mostly neutral position, and the claimants sought no substantive relief against it. Lord Justice Miles heard the case in June and July 2025 and gave judgment on 15 October 2025 in [2025] EWHC 2631 (Ch). The claimants contended that the CEA and TA left Greensill Limited with effectively no assets, rendered the intended security for the Fairymead notes valueless and benefited the SoftBank defendants, who they said were culpably involved. The SoftBank defendants denied that the claimants had any entitlement to relief against them under section 423, contending that the transactions were part of a linked set intended to put the Greensill group in funds to repurchase or repay the notes, that the $440 million was provided in November 2020 on that understanding, that they only discovered after 30 December 2020 that it had not been so used, and that their only benefit, shares in Katerra, became valueless when the Katerra group entered bankruptcy in June 2021. On those cases the court found that Greensill Limited had the purpose required by section 423 and that the transaction was at an undervalue, but that the SoftBank defendants did not know of or share that purpose, and it dismissed the claim, making no order against them; no appeal against the judgment appears in the record. ¹

analysisThe court held that the CEA was a transaction at an undervalue. By releasing its rights under the receivables purchase agreement Greensill Limited gave up valuable assets, its rights over the purchased receivables and related security, whose value would otherwise have passed to the noteholders, and obtained no consideration in money or money's worth. The SoftBank defendants, with Greensill Limited's liquidators taking a mostly neutral position, argued that the release left Greensill Limited no worse off because it also relieved it of its obligation to pay participation amounts, and that the arrangement for the $440 million to be used to buy or redeem the Fairymead notes was itself consideration to Greensill Limited; the court rejected both arguments. It held that any notional relief from paying participation amounts was offset by Greensill Limited's liability for breaching its undertaking in the Participation Agreement not to agree amendments or waivers without the participation holders' prior written consent, which it was common ground had not been given. The court valued those rights at 30 December 2020 at $86.2 million: actual receivables with a face value of $250 million and type 1 future receivables with a face value of $10 million at a 22% recovery rate ($57.2 million), plus $29 million of secured collections. It found that Lex Greensill understood that the CEA would break the securitisation chain: Lex Greensill accepted in evidence that Jonathan Lane, the group's senior internal lawyer, had said at the time that by writing off the debt Greensill Limited was effectively killing off the assets underpinning the notes, an asset effectively held by Credit Suisse Virtuoso, and that this could not be done without speaking to the beneficial owner, while saying that this conversation took place after the $440 million had been received. The court also found that Lex Greensill knew Credit Suisse would not consent to the release of the receivables purchase agreement, did not ask for its consent and concealed the position from it, giving the misleading impression that the release would take effect only after a buy-back of the Fairymead notes, and it rejected Lex Greensill's evidence that the SoftBank defendants had prevented disclosure by insisting on the Omnibus Deed's confidentiality provisions. ¹

analysisOn purpose, the court found that Greensill Limited, through Lex Greensill, entered the CEA and TA on 30 December 2020 with the purpose of prejudicing the noteholders' interests, releasing its only asset in order to keep SoftBank on side while Lex Greensill sought a $1.5 billion loan to meet BaFin's demands concerning Greensill Bank, although Lex Greensill would have preferred to pay the noteholders in full. Lex Greensill had consistently explained in evidence that the purpose of the $440 million injection was the purchase or redemption of the Fairymead notes, and the SoftBank defendants contended that when Lex Greensill decided on 4 December 2020 to cause the transactions the intention was that the sub-fund would be made whole; the court did not accept this analysis, holding among other things that the purpose had to be ascertained when the transaction was entered into and that Lex Greensill had authorised Greensill Limited to enter into the agreements on 30 December 2020. It found that the SoftBank defendants did not know or suspect that the transactions were entered into for the purpose of prejudicing the claimants, believed in good faith that the $440 million would be used to pay the Fairymead noteholders, did not share in or know of Greensill Limited's purpose, and did not orchestrate the transactions, which were commercially negotiated agreements. On 6 June 2021 Katerra Inc. (Cayman Islands), its Delaware intermediate holding company and 31 affiliates, including the Katerra sellers, had filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code, the US court-supervised reorganisation procedure, in the Bankruptcy Court for the Southern District of Texas; at the 2025 trial the claimants submitted that the bankruptcy was ongoing and had not been completed, so that its overall recovery was not known. The court made no order against the SoftBank defendants and dismissed the claim: relief could at most have been capped at the $11.3 million value of the Katerra shares received by SoftBank Vision Fund 2, and Katerra's bankruptcy in June 2021, when the shares were cancelled, amounted to 'the extreme case of the value of an asset falling to nil'; there was no independent basis for relief against SBG. ¹

analysisThe same transactions were the subject of the disqualification proceedings against Lex Greensill under the Company Directors Disqualification Act 1986, which allows a person to be barred from acting as a company director. In proceedings issued in March 2024, the Secretary of State for Business and Trade alleged, in evidence given in an affirmation by a chief investigator of the Insolvency Service, that in November and December 2020 Lex Greensill caused GCUK and Greensill Limited to enter into transactions with SoftBank group companies to the detriment of investors in the Katerra notes programme, and caused or allowed GCUK to apply $440 million received in November 2020 otherwise than to redeem the Katerra notes, causing the noteholders losses exceeding that amount (the 'Katerra Allegations'). In an application to strike out the proceedings, that is, to end them without a trial, Lex Greensill contended that the Secretary of State should have obtained documents and witness evidence from Credit Suisse, that documents referred to in the Credit Suisse v SoftBank proceedings tended to support Lex Greensill's case that Credit Suisse was aware of the implications of the Katerra restructuring, and that emails with Credit Suisse employees, not available to the court, tended to suggest that Lex Greensill had not lied to Credit Suisse as the Secretary of State alleged. Those were contentions, not findings; in the separate Credit Suisse v SoftBank proceedings, to which the Secretary of State was not a party, the High Court had found that Lex Greensill's communications concealed the true position from the Credit Suisse claimants. Mr Justice Trower dismissed the strike-out application on 18 March 2026 ([2026] EWHC 639 (Ch)), holding that questions about potentially exculpatory material were a matter for trial. The allegations were not tried: the proceedings ended when the Secretary of State accepted a disqualification undertaking on 2 June 2026, before the six-week trial due to begin on 8 June 2026. The Insolvency Service's announcement of 4 June 2026 states that in late 2020 Lex Greensill caused GCUK, Greensill Limited and GCPL to enter into transactions that removed the legal protections underpinning the Lux fund's investment in Katerra-backed notes, so that the receivables no longer required payment, the security was released and the payment obligations supporting the fund's trade credit insurance were cancelled, without the required written consents, and caused or allowed GCUK to use $440 million received in November 2020 for purposes other than redeeming the notes, which all defaulted with a loss of $440 million to the fund. That account was published with the undertaking, under which a director does not dispute certain facts for the purposes of the disqualification proceedings only, and is not a court finding; separately, the High Court recorded in [2025] EWHC 2631 (Ch) that it was common ground that the prior written consent required under the Participation Agreement had not been given. ^{1 2 3}