ABI Podcast: Examining Issues Surrounding Commercial Litigation Finance in Bankruptcy

Ken Epstein, Investment Manager and Legal Counsel at Bentham IMF, sits down with former ABI Resident Scholar Prof. Drew Dawson of the University of Miami School of Law to talk about some of the effective ways litigation finance can be used in bankruptcy on a recent ABI podcast. 

Epstein discusses how commercial litigation finance works, the ways litigation funding is used, and how it can be beneficial in the bankruptcy context. “This is one of the areas that I'm really excited about. It is a way that our product can be used to increase recoveries to trust beneficiaries,” he says. 

In addition, Epstein provides examples of how litigation funding can benefit the different parties in a bankruptcy matter. “In a bankruptcy context it can be used by debtors, creditors, trustees, receivers - anybody who has a litigation claim that it controls and either doesn't have the resources to bring it or wishes to share some of the risks associated with the litigation.”

Epstein also points out some of the questions raised and common misconceptions about litigation finance and control issues, which are alleviated in the bankruptcy context, “[there is] a distinction in the bankruptcy context where you have a trustee or someone else who has a fiduciary duty to creditors… even more reason why bankruptcy is a great way to proceed with litigation finance because you do have disclosure, and everyone has a chance to make sure that whatever consultation rights or information rights the funder has - it doesn't go too far towards the spectrum of control.”

Dawson concludes the podcast noting that “it will be interesting to watch the growth of this industry and the impact this is going to have on both commercial litigation broadly, but especially in the context of bankruptcy.”

To listen to the podcast, click here.

To read more about the benefits of utilizing commercial litigation finance in corporate bankruptcy cases, read our article in the New York Law Journal.

To learn more about how litigation finance can be used in bankruptcy, contact us for a consultation or visit the bankruptcy funding page on Bentham’s website.