The collapse of Greensill Capital in 2021, followed by difficulties at Stenn and Pipe.com, drew significant scrutiny to trade and receivables finance as an asset class. Each situation had its own proximate causes. But examined together, they illuminate a consistent set of failure modes — and, by extension, the principles that sound practice demands.
It is worth being clear at the outset: these failures were not evidence that trade finance is inherently risky. The asset class itself — short-duration, self-liquidating, anchored in commercial transactions — remains structurally sound. What failed was execution.
The Greensill Pattern: Concentration and Classification
Greensill's problems were rooted in two related issues. The first was concentration — a significant portion of its book was tied to a small number of obligors, most notably the Gupta Family Group. When those relationships deteriorated, the portfolio had no buffer. The second was the misclassification of assets: "prospective receivables" — obligations that had not yet arisen from actual commercial transactions — were packaged as supply chain finance assets. This blurred the foundational distinction between trade finance and unsecured lending.
"The discipline of trade finance is, in part, the discipline of staying within its definitional boundaries. An asset tied to a real, documented commercial transaction behaves differently — and more predictably — than one that does not."
Sound trade finance practice requires that assets be traceable to actual invoices or purchase orders, that debtor concentration be actively managed, and that the underwriting framework reflect the credit quality of the obligor — not the ambitions of the platform.
The Pipe and Stenn Patterns: Underwriting and Governance
Pipe.com's difficulties reflected a different but related failure: the subordination of underwriting rigor to growth velocity. Originating volume at speed, without the controls needed to validate asset quality, creates a portfolio that looks healthy until it does not. The platform infrastructure was sophisticated; the credit discipline was not commensurate with the risk being taken on.
Stenn's situation involved questions of fraud and counterparty integrity — a reminder that KYC and AML are not compliance formalities. They are substantive risk controls. In trade finance, where assets are distributed across many obligors and many jurisdictions, counterparty verification is an ongoing operational function, not a one-time onboarding step.
What Conservative Practice Looks Like
The common thread across these cases is the substitution of growth ambition for credit discipline. This is not unique to trade finance — it is a recurring pattern in financial services when capital is abundant and competitive pressure is high. The corrective is straightforward to articulate, if demanding to maintain:
- Assets must be real. Every facility should be traceable to an actual commercial transaction with documented terms.
- Concentration must be managed. Debtor and sector limits are not advisory; they are structural protections.
- Underwriting must reflect the obligor. Trade finance pricing should be anchored to the creditworthiness of the account debtor, not optimized around origination volume.
- KYC and AML are operational, not administrative. Counterparty integrity requires continuous monitoring, not point-in-time verification.
- Operational infrastructure must scale with the book. Technology is an enabler. It does not substitute for experienced judgment in risk management and servicing.
The Case for Experience
These principles are, in practice, the product of experience. Teams that have managed portfolios through credit cycles, built settlement infrastructure at scale, and operated under the oversight of regulated financial institutions carry institutional knowledge that is difficult to replicate quickly. The firms that have performed well in trade finance over time are, without exception, those that prioritized the integrity of the asset over the velocity of the platform.
At Price Ridge Capital, our approach to credit and operations is grounded in exactly this lineage — decades of building and running the infrastructure that responsible trade finance practice requires. The failures of recent years have not diminished the opportunity in this asset class. If anything, they have clarified what sound participation looks like.