Bankruptcy Litigation Could See More Third-Party Funding

By Daniel Simon and Natalie Rowles (April 20, 2021, 3:50 PM EDT) -- Several years ago, legal practitioners and other professionals began to predict a likely rise in the use of third-party litigation financing in U.S. bankruptcy cases. Among these prognostications, commentators have speculated that third-party litigation financing in bankruptcy is a "trend that will accelerate just like claims trading has in the last decade" and has the "potential to really catch on."[1]

The opportunities for third-party litigation finance in bankruptcy cases have been described as a "match made in heaven" because insolvent estates are, by definition, strapped for cash, with estate fiduciaries trying to maximize the value of limited assets.[2]

These forecasts have,...

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