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Commercial Deals

Legal Funding Looks Toward Interim Finance for Bankrupt Firms

Resolution professionals are increasingly turning to third-party legal funders in order to provide operating capital until liquidation is complete, or a new owner reorganizes the company. Economic Times explains that a corporate insolvency resolution process is a tenuous situation requiring a balancing act between making payments and keeping the business going. When lenders refuse to provide the needed funds, third-party funders can provide interim funds to cover costs. This type of financing, called debt-in-possession, has become increasingly popular in Australia, Canada, the US, and the UK. LegalPay CEO Kindan Sahi says that the India-based funder is targeting mid-market clients to fund these ongoing concerns until firms can support themselves.
Case Developments Commercial

Galactic Pulls Out of Hog’s Breath, Priceline Class Actions 

Levitt Robinson, class action lawyers leading the cases against Priceline and Hog’s Breath, estimate that it will take over $8 million to continue the Priceline case. The case is now in jeopardy, as funder Galactic Litigation Partners has pulled its financing. Executive Franchise Business details that class actions claimants in the Priceline case are likely to discontinue their pursuit of the case now that funding has dried up. The Hog’s Breath case is unfunded, and an order to provide $1.23 million in security for costs is outstanding. With one case being withdrawn and one on hold, it’s unclear if Levitt Robinson will be able to court the funding necessary to continue either claim.  
Commercial Deals

Litigation Funder Focuses on High Volume of Small Claims 

The United Kingdom is home to The Catch Litigation Fund (KLIF), a litigation investment portfolio that saw returns of about 16% during 2021. Traditionally, many ligation portfolios focus on a small number of high value claims, with long timelines for successful execution. What makes KLIF different is that managers invest in a high volume of lower value claims, with a shorter duration to maturity.  G., Opalesque Geneva recently issued a report on KLIF’s performance. Launched in 2020 with $56M, the fund focuses on financial services sector claims for investment. With an average loan of $6.7M, KLIF sports an average time for return on investment of just three to 24 months.  Organization is key to KLIF’s approach, and by partnering with attorney’s directly they are able to source claims with shorter overall durations. With this structure, the fund is able to loan directly to the firms representing cases. KLIF is run by Katch Investment Group, with offices across the UK, Europe and South America. Founded in 2018, the alternative investment fund manages over $800M in assets.
Commercial Deals

Omni Bridgeway Funds NovelStem Arbitration

The stem cell biotechnology firm NovelStem International Corporation has launched arbitration proceedings against NetCo Partners to maximize value from legacy entertainment publishing assets. Omni Bridgeway has been announced as the litigation funder backing NovelStem’s ambitions. NewsFileCorp.com’s press release on the developing matter outlines that NovelStem’s Chairman plans to extract value from their 50% stake in Netco Partners. Netco’s publishing arm, Net Force, has generated over $24M in total revenue since inception, and NovelStem anticipates substantial returns may be captured across digital, media and entertainment pillars.   NovelStem’s Chairman further details that litigation investment by Omni Bridgeway is enabling flexibility for broader investment in NewStem Ltd. Over the coming months, NovelStem plans to brief investors on the success of the NetCo Partners litigation and growth of NewStem Ltd.’s new investment dollars. 
Consumer

Lion Air Flight 610 Victim’s Fund Embezzlement Probed by California State Bar 

With $2M missing from the Lion Air plane crash victims fund, California’s State Bar fears that disgraced attorney Tom Girardi may have embezzled the funds. Mr. Giradi was disbarred this past August, however, it appears that California investigators may have fallen prey to free gifts, plane rides and expensive wine from Girardi … allegedly tainting justice in the process.    DailyMail.co.uk reports that the State Bar of California is launching a new investigation into their handling of Tom Girardi’s potential malfeasances. The question is if Girardi has been able to buy his way out of discipline by California officials. A federal judge froze Girardi’s assets in 2020, after growing concern that he routinely misappropriated settlement funds to bankroll his Beverly Hills lifestyle.  Recently, Girardi was diagnosed with dementia and late stage Alzheimer's. Girardi has previously been sued by a slew of Law Firm Funders, each of whom made financial misappropriation claims against him. 
Case Developments Commercial

Lead Mine Owners Face Human Rights Class Action 

Augusta Ventures is funding a lead poisoning class action that may include more than 100,000 Zambians. London human rights attorneys at Leigh Day have collaborated with South African Mbuyisa Molee attorneys to file the class action lawsuit against Anglo American South Africa Limited (AASA).  Bloomberg.com reports that an AASA spokesman says that the suit is bogus, misdirected and completely opportunistic. The lawsuit alleges that AASA managed the mine in question, and for years contributed to toxic exposure to lead. Proponents further argue that lead exposure has damaged waterways adjacent to the mine. AASA’s parent company, Anglo American Plc, reported revenue of $30B in 2020, which leads many experts to suggest that the firm will look to string out any forthcoming litigation claims.  Augusta Ventures has taken on funding of the lead mine litigation class. Augusta is funded by the $2T asset management firm, Pacific Investment Management Company. With Augusta on board, it would appear that outgunning justice may be difficult for AASA over the long term. 
Case Developments Commercial

PriceRunner Launches $2.4B Anti-Competition Claim Against Google

After a seven year investigation, the European General Court upheld a $2.7B fine for Google’s breach of antitrust laws, for providing Google Shopping preference over competitors. Now the Swedish price comparison company, PriceRunner, has filed its own $2.4B claim against Google for cultivating anti-competitive behavior that allegedly disenfranchised PriceRunner’s business. CNBC.com reports that PriceRunner views the claim against Google as part of a pattern of anticompetitive behavior that has caused significant consumer suffering and has stifled entrepreneurial innovation. Furthermore, PriceRunner suggests that Google has not complied with the European Union’s ruling on abusing its search engine’s dominant position.  PriceRunner was recently acquired by the fintech firm Klarna. Similar to purchasing a litigation claim, PriceRunner’s new owners want Google to pay for PriceRunner’s lost revenue in the United Kingdom, Sweden and Denmark. The theme of reverse regulatory arbitrage is seemingly what PriceRunner hopes to profit from regarding this claim. 
Case Developments Commercial

Billionaire Seeks Litigation Bankruptcy Protections 

Guo Wengui, a notable Chinese billionaire with close connections to Republican advisor Steve Bannon, has filed for Chapter 11 bankruptcy protections. Recently, a court ordered Wengui to pay $134M in restitution after being accused of avoiding debt collection. Wengui stresses that his debts are not related to any business expenses. Wengui shares that his debts nearly all stem from litigation expenses attributed to claims and judgments against his various enterprises.  Politico.com reports that a judge has sought to seize Wengui’s yacht, previously anchored in New York. Wengui argues that he is not an owner of the yacht, but authorities have tracked the vessel, which was moved from New York Harbor down to the Bahamas. Wengui was given five days to pay a fine associated with the yach’s departure from New York against court order. Releasing a statement on social media, Wengui suggests he must file for bankruptcy given his debts may be close to $500M. He further claims that currently his net worth is somewhere between $50,000 to $100,000.  Mr. Wengui amassed a real estate fortune before going broke, according to Politico.com. Wengui’s relationship with Donald Trump advisor Steve Bannon is subject of watercooler discussion, this after Bannon and Wengui partnered to launch the G-TV media company.
Commercial

LexShares’ Litigation Funding Marketplace Review

With the pandemic beginning to ebb, the numbers are in and point to an increase in litigation funding across global markets, with some lawyers reporting up to 70%+ uptick in business. Correspondingly, litigation funders are seeing a near 60% uptick in business during the same period. Disclosures are still a hot topic for the industry, with only two high profile discovery disclosures during 2021.  LexShares recently released their industry outlook profiling the fourth quarter of 2021. Research figures suggest that over 20% of attorneys plan to explore the benefits of litigation investment in the near future. The single case is still the bread and butter of litigation finance, claiming over 50% of overall litigation business revenues. That said, asset class diversification of ligation investment is prospering, with portfolio and counterparty organization a major target for many funders.  LexShares attributes non-conformity to disclosure regulation as a positive situation, while the industry solidifies jurisdictional clarity. LexShares points to a more opaque scenario in terms of attorney compensation with the rise of litigation finance. Some suggest that partner salaries are the major beneficiaries of the industry's success.    Check-out LexShares’ full research, which outlines key facts and figures pertaining to litigation investment.