Glencore seeks to recover $236m in assets from the bankrupt Prax refinery following allegations of widespread invoice fraud and financial misrepresentation by former owner Winston Soosaipillai.
HSBC's loan facility was cancelled due to fraud discovered at the borrower, highlighting credit risk and potential reputational damage.
Glencore is pursuing legal action to recover assets from a bankrupt counterparty, which carries litigation risk but potential for asset recovery.
The High Court has granted Glencore permission to pursue legal action against the collapsed Prax refinery, alleging the firm used £334m in fake invoices to secure financing. The case centers on $236m in crude oil delivered by Glencore before Prax's insolvency, which also triggered a loan cancellation by HSBC due to discovered irregularities.
Prax collapsed with over £1.5bn in debt after HSBC cancelled a major loan facility following the discovery of material irregularities and alleged invoice fraud.
Glencore is seeking to rescind its contracts with Prax to recover $236m worth of crude oil delivered to the refinery shortly before its insolvency.