Publications

Insolvency Insights

Summary

Insolvency litigation funding can help maximize recoveries to creditors and other stakeholders involved in the insolvency process. Omni Bridgeway’s Insolvency Insights compilation features articles, podcasts and blog posts addressing the host of opportunities that insolvency funding presents for creditors, impecunious companies, estate representatives and their counsel.

Topics addressed include:

  • Creditors using litigation finance to pursue intercreditor litigation and lien challenges
  • Estates using litigation funding to pursue recovery claims that benefit all creditors
  • Trustees seeking to retain contingency counsel or hiring lawyers on an alternative fee basis
  • Lawyers advising senior management and corporate boards on the use of litigation finance
  • The ability of estates to recover legal fees when fee-shifting is otherwise available in a case
  • Portfolio litigation funding and its use by financially distressed companies and insolvent estates
  • Forecasting the future of litigation finance and its use by insolvency practitioners
  • Insights on dispute finance for insolvency-related claims
  • An interview with Omni Bridgeway funding specialist, Ken Epstein

Litigation in the insolvency context

Litigation is one of the primary tools of the insolvency practitioner and serves a key role in driving settlements and recovering assets into insolvent estates. Litigation is also extremely costly, presenting a challenge to those with limited financial resources. A disparity in economic resources can adversely impact claim values, and lead to sub-optimal results like the abandonment of claims or settlements for pennies on the dollar. However, this need not be the case when litigation funding is available.  

How a cash-strapped estate can maximize creditor recoveries

One now-common practice of estate representatives and their counsel is to seek to mitigate financial disparities by hiring legal counsel on a contingency basis. However, in many cases, this arrangement offers an imperfect solution. While a contingency fee arrangement may allow the trustee to bring claims he or she might otherwise be unable to afford, it can also limit the upside to the insolvency estate.

Omni Bridgeway’s litigation funding offers an alternative: an insolvent estate can obtain capital to pursue its claims in exchange for a contracted rate-of-return. Funding is now commonplace in the legal industry and is particularly well suited for corporate debtors and trustees handling insolvent estates.

How litigation funding can be used

Litigation funding can be used in a number of ways, including:

  • Paying legal fees and costs for avoidance actions, claims for breach of fiduciary duties, insurance coverage disputes, turnover and tax recoveries, recoupment and setoff issues, equitable subordination and contested matters (i.e., 9019, plan/sale process)
  • Paying expert fees and other litigation costs not covered by contingency counsel
  • Debtor in possession and exit financing (when litigation is a main driver of estate value)
  • Paying for costly pre-litigation or pre-confirmation claims analyses
  • Providing a liquidity event to creditors at the time of plan confirmation
  • Monetizing judgments, de-risking and funding appeals

By using Omni Bridgeway’s litigation financing, insolvency practitioners can level the litigation playing field and increase liquidity to an insolvent estate or litigation trust. Our non-recourse financing means Omni Bridgeway will recoup a return on its investment only in the event of a successful resolution.

As one of the most experienced and global litigation funders in the world, Omni Bridgeway has an exceptional ability to extend financing and litigation expertise to assist claimants in cases around the world.

Please visit Omni Bridgeway’s Insolvency Funding page for additional information about our insolvency funding solutions and expertise.

Complete the form to the right to subscribe and receive this document. We'll keep you up-to-date and send you similar content in the future.

Complete the form below to subscribe and receive this document. We'll keep you up-to-date and send you similar content in the future.