Claim by an insolvent gaming company against a predatory lender

In Canada, we are funding an action by an insolvent debtor, Bluberi, against its main lender, who it alleges acted in a predatory way in order to cause Bluberi’s demise. The insolvency court approved our funding of the debtor’s lawsuit, which decision was confirmed by a unanimous Supreme Court of Canada in January 2020. In its reasons for judgment, Canada’s highest court confirmed that Omni Bridgeway’s litigation funding constituted interim financing as a tool for “allowing the debtor to realize on the value of its assets”, i.e. its litigation.

 

The Supreme Court of Canada also confirmed that, in most instances, an insolvency court can approve litigation funding without creditor approval, because litigation “is akin to a ‘pot of gold’. […] When the ‘pot of gold’ is secure — that is, in the event of any litigation or settlement — the net funds will be distributed to the creditors. Here, if the [claims] generate funds in excess of Bluberi’s total liabilities, the creditors will be paid in full; if there is a shortfall, a plan of arrangement or compromise will determine how the funds are distributed.”

 

Given the Supreme Court’s endorsement of Omni Bridgeway’s litigation funding in this matter, Bluberi will be able to continue pursuing its claims and seeking access to justice against its former lender.