Greensill Crisis Exposes Murky ‘Hidden Debt’ Accounting (1)

Greensill Capital’s meltdown highlights a problem investors, regulators, and rating agencies have warned about for more than two years: the largely untracked use of a complex form of financing that Greensill helped popularize.

Few companies reveal whether they use supply chain financing, an increasingly popular tool that helps companies free up cash by spreading out payments to suppliers—something Fitch Ratings in 2018 called a “hidden debt loophole.” There are no formal U.S. or international accounting rules compelling companies to be frank with investors. Greensill’s potential insolvency could put the cash flows of some companies under pressure, but the lack of ...