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Landmark New York Court’s Decision Strengthens the Future of Litigation Funding

Landmark New York Court’s Decision Strengthens the Future of Litigation Funding

The following piece was contributed by Guido Demarco, Director and Head of Legal Assets at Stonward. In a groundbreaking legal battle that pitted Petersen Energía SAU and Petersen Energía Inversora SAU[1] (the Petersen Companies) against the Republic of Argentina, the recent decision by the District Court of Southern District of New York has far-reaching implications for the litigation funding industry. This landmark ruling reaffirms the critical role litigation funders play in providing access to justice, particularly in complex cases involving powerful sovereign entities. The Petersen case was a high-stake dispute that arose when Argentina failed to fulfill its obligations under the bylaws of YPF S.A, the national oil company. When Argentina privatized the company during the 90s, the country promised under the bylaws a compensated exit to shareholders – a mandatory tender offer – if Argentina were to reacquire control of the company by any means. In 2012, Argentina expropriated Repsol’s 51% stake in YPF but did not fulfill this promise, eventually plunging the Petersen Companies into insolvency and liquidation. To fight back against this injustice, the resourceful insolvency administrator of the companies, Armando Betancor, devised a liquidation plan in 2015 that included securing litigation funding. Given the immense risks involved, the Petersen Companies had to assign 70% of any recovery obtained in the claims to Burford Capital, the litigation funder. These risks included fighting a fierce sovereign in New York courts, which implied paying high attorney and experts’ fees during a lengthy period, as well as enforcement risks. During the trial, Argentina attempted to diminish the awarded damages by arguing that the litigation funder was the primary beneficiary of the compensation, seeking to shift the focus away from the plaintiffs’ rightful claims. This tactic sought to undermine the legitimacy of the litigation funding arrangement, implying that the claimants should receive reduced damages due to the involvement of a third-party funder. However, the court’s decision firmly rejected this argument, emphasizing that the responsibility for compensation lay with Argentina, regardless of the funding arrangement, ensuring that the claimants were not deprived of the full measure of their entitled damages. In a single paragraph, the Judge unequivocally dismissed Argentina’s attempts to derail the case by injecting the role of Burford Capital into the proceedings. The Judge emphasized that the essence of the case remained between the plaintiffs and the defendant who inequitably refused to comply with its promises: “The Court also rejects the Republic’s effort to inject Burford Capital into these proceedings. This remains a case brought by plaintiffs against a defendant for its wrongful conduct towards them, and the relevant question is what the Republic owes Plaintiffs to compensate them for the loss of the use of their money, not what Plaintiffs have done or will do with what they are owed. The Republic owes no more or less because of Burford Capital’s involvement. Furthermore, the Republic pulled the considerable levers available to it as a sovereign to attempt to take what it should have paid for and has since spared no expense in its defense. If Plaintiffs were required to trade a substantial part of their potential recovery to secure the financing necessary to bring their claims, in Petersen’s case because it was driven to bankruptcy, and litigate their claims to conclusion against a powerful sovereign defendant that has behaved in this manner, this is all the more reason to award Plaintiffs the full measure of their damages.” Ironically, the most powerful impact for the litigation funding industry comes not from a lengthy legal argument, but from a single paragraph tucked away in a footnote of the judgment. Within this inconspicuous footnote, the Judge’s words resonate loudly, reaffirming the fundamental principles underpinning litigation funding. It reminds us that justice is blind to the funding mechanisms employed to level the playing field and that litigants should not be penalized for seeking financial support, particularly when facing formidable sovereign opponents and obstacles. No doubt, this will be a beacon in times in which the industry is under heavy scrutiny, especially in Europe under the so-called Voss Report. The ruling reaffirms the legitimacy and importance of litigation funders in enabling access to justice in complex cases where financial backing is essential to bring claims to fruition. The Court’s decision in the Petersen case is a significant victory not only for the plaintiffs but also for the litigation funding industry. It sets a powerful precedent that reinforces the rights of litigants to secure funding for their cases without sacrificing the full measure of their damages, contributing to a more equitable and accessible legal system. This decision will inspire confidence among potential litigants, funders, and investors alike, encouraging continued growth in the litigation funding industry. We, at Stonward, are proud of having Armando Betancor, the insolvency administrator of the Petersen companies, in our Board of Investment. [1] Petersen Energía SAU and Petersen Energía Inversora SAU v. Republic of Argentina, District Court of Southern District of New York, 15 Civ. 2739 (LAP) – 16 Civ. 8569 (LAP)

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Omni Bridgeway Reports Strong 2Q26 Portfolio Performance

By John Freund |

Global litigation funder Omni Bridgeway has released a positive second quarter portfolio update, pointing to strong completion metrics and reinforcing confidence in its diversified funding strategy across jurisdictions and dispute types. The update highlights the importance of disciplined case selection and portfolio construction at a time when the legal funding market continues to mature and face closer scrutiny from investors.

An article in GlobeNewswire outlines that Omni Bridgeway recorded excellent completion outcomes during the quarter, with multiple matters reaching resolution and contributing to realizations. The company emphasized that these completions were achieved across different regions and segments of its portfolio, underscoring the benefits of geographic and claim diversification. Management noted that the results were consistent with internal expectations and supported the firm’s longer term return profile.

According to the update, Omni Bridgeway continues to focus on converting invested capital into realized proceeds, rather than simply growing commitments. The funder highlighted that completion metrics are a key indicator of portfolio health, as they reflect both successful case outcomes and effective timing of resolutions. Strong completions also provide liquidity that can be recycled into new opportunities, supporting sustainable growth without excessive balance sheet strain.

The update also touched on broader portfolio dynamics, including the ongoing mix of single case investments and portfolio arrangements with law firms and corporates. Omni Bridgeway reiterated that its underwriting approach remains cautious, with an emphasis on downside protection and realistic settlement expectations. While the company acknowledged that litigation timelines can be unpredictable, it expressed confidence that the current portfolio is well positioned to deliver value over the medium term.

Manchester Funder Backs £10m AI Push Amid Industry Warning

By John Freund |

A Manchester based litigation funder has made a significant technology bet, committing £10 million to artificial intelligence while cautioning that parts of the legal funding sector risk falling behind if they fail to adapt. The investment reflects a growing recognition among funders that data driven tools and automation are becoming central to underwriting, case management, and portfolio strategy.

An article in Business Mondays reports that the funder is directing the capital into proprietary AI systems designed to improve case selection, risk analysis, and operational efficiency. According to the company, the technology will be used to analyse large volumes of legal and financial data, helping the funder assess claims more quickly and with greater precision than traditional methods allow. Management described the investment as both offensive and defensive, aimed at creating competitive advantage while ensuring the business remains resilient as the market becomes more crowded.

Alongside the announcement, the funder issued a warning to the wider sector, arguing that firms which rely solely on conventional underwriting approaches may struggle in the coming years. The increasing scale of disputes, the growth of portfolio funding, and pressure from institutional capital are all pushing funders toward more sophisticated analytics. AI, the company suggested, is no longer an optional add on but an essential component of modern litigation finance.

The article also situates the move within Manchester’s expanding legal and technology ecosystem, noting the city’s appeal as a base for innovation outside London. By building AI capability in house, the funder aims to attract talent from both legal and technical backgrounds while retaining tighter control over sensitive data and models.

For the legal funding industry, the announcement highlights an accelerating trend toward technology driven differentiation. As more capital enters the market and returns come under scrutiny, funders that can demonstrate superior risk assessment and scalability may gain an edge.

Burford Capital Wins Appeal in $50 Million Sysco Settlement Fight

By John Freund |

Litigation funder Burford Capital has secured a notable appellate victory in a long running antitrust dispute tied to allegations of price fixing in the US meat industry. The decision strengthens Burford’s position in a case that has drawn attention for both its financial scale and the broader questions it raises about the role of third party funders in settlement negotiations.

An article in Reuters reports that the US Court of Appeals for the Seventh Circuit overturned a lower court ruling that would have enforced a proposed $50 million settlement between Sysco Corp and poultry producer Pilgrim’s Pride. The appellate court concluded that Sysco had not entered into a binding settlement agreement because key terms were still unresolved at the time the offer was purportedly accepted. As a result, the court vacated the settlement and cleared the way for the claims to continue.

Burford had financed Sysco’s antitrust claims since 2019, committing approximately $140 million to support litigation alleging collusion among chicken, beef, and pork producers. When Sysco moved to accept the $50 million settlement offer, Burford objected, arguing the amount dramatically undervalued the claims. The funder sought and obtained a court order blocking the settlement, after which Sysco transferred its rights in the litigation to a Burford affiliate, Carina Ventures. That transfer positioned Burford to directly pursue the claims following the appeal.

Writing for the majority, Circuit Judge David Hamilton emphasized that the email exchanges cited by Pilgrim’s Pride did not reflect a final agreement. A concurring opinion, however, raised concerns about the degree of influence exercised by litigation funders over settlement decisions, suggesting that funder involvement can complicate negotiations and introduce competing incentives. Burford rejected that characterization, stating that the record did not support claims of undue influence.