The London-headquartered group announced on Tuesday night it was working on a deal to sell large parts of its business and assets under management to another financial institution by week end.

It would mark an unexpected end to the group founded in Bundaberg in 2011 by Lex Greensill and in the past year has been valued at $6 billion. Greensill was planning an initial public offering later this year.

Greensill provides a service known as supply chain financing that allows suppliers to big companies to be paid earlier for a fee. These financing arrangements are then packaged up and rolled into securities that are sold by Credit Suisse and GAM. The freezing of the funds effectively shut Greensill off from these billions of dollars of funds that usually flow through its business.

The embattled group has already sought safe harbour protection under Australian insolvency law which will allow it to continue to trade while potentially insolvent. The Age and The Sydney Morning Herald revealed yesterday that Greensill had in recent months lost key local clients Telstra and CIMIC-owned services group UGL as clients.

The German financial regulator BaFIN has also taken direct oversight of day-to-day operations at the group’s German-registered bank Greensill Bank, according to the Financial Times. Greensill declined to confirm the extraordinary action by BaFIN.

Back in Australia, the embattled group told the Supreme Court on Monday that the cancellation of its insurance policies would cut off about $US4.6 billion in funding to 40 clients.

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"If the policies are not renewed, Greensill Bank will be unable to provide further funding for working capital of Greensill’s clients. In the absence of that funding, some of Greensill’s clients are likely to become insolvent, defaulting on their existing facilities," counsel for Greensill, Ruth Higgins, SC, told the court.

The NSW court case revealed that Greensill has been having trouble with its insurers for more than six months and that it was warned repeatedly by the agent for its insurers, Tokio Marine, that its policies would not be renewed.

Court documents show Tokio Marine wrote to Greensill’s insurance broker Marsh in August, warning: “Given the current situation [concerning the allegation that the relevant person had no authority to bind risk], we will not be able to bind any new policies, take on any additional risk nor extend or renew any Greensil [sic] policy past what had previously been agreed.”

The court case also revealed that Greensill has been trying to get alternative cover to the polices, without success.

Despite its insurance woes, Greensill plans to forge ahead with a sale of its business to another party, widely believed to be a tie up between Apollo Asset Management and Apollo-backed fund Athene.

"The structure of the new business is still being determined and as soon as we have clarity on this, we will be able to communicate the impact of these changes on roles," a spokesman for Greensill said.

"We expect the transaction to ensure the majority of our clients will continue to be funded in the same way as they currently are."