Zurich Insurance Company was last year sued in London's High Court by the administrators of Greensill Bank AG (GBAG), which entered German insolvency proceedings in 2021, in a dispute over trade credit insurance.

In its defence and counter-claim, dated Jan. 26, Zurich alleges the claims against it arise out of a "fraudulent scheme" involving Lex Greensill, Greensill Capital UK (GCUK), Sanjeev Gupta and three of Gupta's Liberty businesses - part of the GFG Alliance - court filings show.

A spokesperson for Lex Greensill said he "wholly rejects" allegations that were without foundation and which would be "robustly addressed" in his defence and any counterclaims.

A GFG Alliance spokesperson said: "GFG Alliance was not involved in any insurance arrangements which Greensill had in place and any attempt to link us to the Greensill insurance is misplaced."

The 2021 collapse of Greensill, whose Australian founder received a British state honour in 2017 and which once counted British foreign minister David Cameron as an adviser, sparked a raft of litigation and criminal and regulatory investigations.

Zurich alleges that deliberate or reckless misrepresentation and non-disclosures entitled it to avoid insurance policies, refuse claims and deny requests for any return of premiums paid, the court filing showed.

Its allegations include that accounts receivable purportedly being sold by Liberty to GCUK were not genuine, that a Receivables Purchase Agreement was a "sham" and that it was not told that GBAG was under investigation in Germany or about the "true nature" of the business between Greensill and Liberty.

"Each of the said non-disclosures was committed by Mr Greensill in deliberate or reckless breach of GBAG and GCUK's duties of fair presentation," Zurich alleged in the filing.

Greensill, a specialist lender, pledged to help clients manage their finances by paying the bills they owed suppliers - in effect lending them money - while taking invoices from their suppliers as collateral, known as supply chain financing. The loans were repackaged into bonds and sold to investors.

Greensill foundered in 2021 after its main insurer stopped providing cover for billions of dollars of debt in portfolios it had created for clients including Swiss bank Credit Suisse.

Greensill's largest client, Gupta's GFG Alliance, has been under criminal investigation in Britain since 2021 for suspected fraud and money laundering in an investigation that includes its financing arrangements with GCUK.

GFG has consistently denied any wrongdoing.

Should Zurich be found liable in court under its policies, it is claiming a corresponding entitlement against Greensill, Gupta and their companies under its counter-claim.

($1 = 0.9265 euros)

(Reporting by Kirstin Ridley, additional reporting by Sam Tobin and Eric Onstad; Editing by Tommy Reggiori Wilkes and Susan Fenton)

By Kirstin Ridley