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Third Party Litigation Finance and its Impact on the Bankruptcy Industry

Litigation finance’s presence in the bankruptcy industry is in its early stages. However, given the overall size of capital that litigation funders control and how this capital is deployed across case types, its presence in the marketplace will continue to expand -- particularly as the market becomes more familiar with the process, funders grow comfortable with investing in the distressed debt market, and the pace of corporate filings increase in the next economic downturn.

DC Circ. Int'l Arb. Ruling Leaves Award Holders In Legal Limbo

On Aug. 16, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion widely anticipated in the international arbitration and award enforcement communities, involving numerous disputes between the Kingdom of Spain and renewable energy investors from other European nations. In its ruling in NextEra Energy Global Holdings BV v. Kingdom of Spain, the D.C. Circuit provided a glimmer of hope that award holders might succeed in U.S. courts — at least from a technical legal standpoint. At the same time, the court lit a path for foreign sovereigns to render any such victories economically meaningless.

The Recovery Campaign: Combining Asset Tracing and Judgment Enforcement to Get Results

After years of hard-fought litigation, most claimants are thrilled to obtain a final and enforceable judgment or arbitration award. However, more often than one thinks, this excitement is followed by the disappointing realization that the defendant has little interest in voluntarily satisfying the award. This article explores how a judgment creditor might consider creating an enforcement strategy by leveraging an asset trace report. While the research focuses on identifying assets, the ultimate strategy requires a thoughtful engagement between asset tracers and counsel—often across multiple jurisdictions—to achieve success.

Enforcement Case of the Month -- LLC You In Court: Recent Second Circuit Decision Affirms New York Law’s Creditor-Friendly Approach to Seizing LLC Membership Interests

Stubborn judgment debtors routinely look for ways to delay or increase the cost of collection. Aided by a vibrant “asset protection” industry in certain U.S. jurisdictions, they frequently turn to LLCs in those jurisdictions to retain the benefit of their property while shielding it from creditors, hoping that enforcement courts will defer to those states’ LLC acts and prevent turnover of membership interests. But a recent decision by the U.S. Court of Appeals for the Second Circuit provides some reason for optimism that, at least for debtors subject to personal jurisdiction in New York, these corporate shell games may not be entertained by courts in America’s financial hub.

The In-House View -- Litigation Funding and Corporate Insolvency: What In-House Counsel Need to Know

In-house legal counsel are key members of corporate teams and are often responsible for managing credit and insolvency related risks faced by their organizations. Particularly when insolvency and litigation risks converge, in house lawyers play a critical role in helping corporations make strategic decisions to optimize value. The following cases demonstrate how funding can provide unique and flexible solutions for both debtors with affirmative litigation claims and creditors with claims against insolvent corporations.

Enforcement Case of the Month -- Tailwinds for Judgment Creditors: Reverse Veil Piercing Continues to Gain Steam in New York

Judgment and award creditors often fret that US courts are unfriendly and the tools to unravel complicated asset protection schemes are inadequate. In an encouraging ruling refuting this sentiment, the Southern District of New York recently reiterated its endorsement for reverse veil piercing as a remedy for unsatisfied judgment creditors seeking to hold corporate entities responsible for judgment liabilities of shareholders and directors.

The In-House View -- Crunching the Numbers: Using In-House Data Analytics to Prepare the Company’s Litigation Funding Request

Companies with affirmative claims increasingly are using litigation finance to pursue meritorious cases, reduce legal expenses, and manage financial risk. But not all funding requests are approved, and an application can be handicapped by an overly optimistic opinion about the potential recovery in a case or a casually prepared litigation budget.

Enforcement Case of the Month: Hamilton Reserve Bank v. Sri Lanka – Even Better for Sovereigns Than an International Bankruptcy Regime?

One of the significant risks that creditors weigh when deciding whether to lend money is bankruptcy risk: can the borrower use the bankruptcy laws to discharge the debt or compel the creditor to accept less than it bargained for? In the sovereign debt market, it has been an article of faith for creditors that states cannot file for bankruptcy and obtain such relief. But a recent ruling from the U.S. District Court for the Southern District of New York—Hamilton Reserve Bank v. Sri Lanka—may cause creditors to question that faith, with uncertain consequences for sovereign creditors and borrowers alike.

Court of Appeal affirms Omni Bridgeway cost undertaking was good security for Singapore litigation proceedings

The Singapore Court of Appeal has upheld a decision by the Singapore High Court that a costs undertaking given by Omni Bridgeway was an adequate form of security for costs. The High Court decision was the first time a Singapore court has permitted a litigation funder to provide a costs undertaking as security. The Court of Appeal’s endorsement of the decision is another example of the Singapore judiciary’s continuing acceptance of third party dispute finance for court proceedings.