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Commercial

How to Structure an Affirmative Recovery Plan

There are a multitude of ways to structure an affirmative recovery program, but the central guiding principles remain the same. It’s vital to make any new initiatives company-wide so everyone is involved and participating in the same goals. It’s equally important to know that focusing on the legal department doesn’t have to mean enlarging your staff. Therium Capital’s Guide: A Good Offense, explains the importance of setting both short and long-term goals, then regularly measuring one’s progress. In developing an initial strategy, it may make sense to look for easily attainable goals. Assembling a team and locating reliable partnerships may take time—but it’s time well-spent. This might include outside counsel, internal staffers, and litigation funding partners. The team should involve people whose ongoing task is asserting claims. This doesn’t necessarily mean filing new actions, only that simply reminding debtors what they owe can go a long way toward getting remuneration. Bringing a delinquent debtor to the table might be as simple as sending a Notice of Breach. Also vital to any affirmative recovery plan is setting clear standards on how cases will be greenlit. Obviously, it’s disadvantageous to bring claims that will cost more to complete than any realistic potential reward. The same applies if a case will require an extensive time commitment from key figures in the firm. Firms would do well to devise an outline or checklist detailing the specific criteria used for case selection. While the specifics may differ, the goal of any affirmative recovery program is to improve the bottom line. But it’s just as important to consider optics. Ethical, responsible behavior is important. But branding experts know that for the full benefit—investors and the public should understand which firms are responsible and ethical. That means good communication is critical in a successful affirmative recovery program.
Announcements Consumer

Tribeca Lawsuit Loans Now Accepting Applications From Zantac Claimants

Tribeca Capital Group, LLC, a leading pre-settlement litigation funding company, announced today that it is accepting applications for litigation advances from patients who have filed claims or lawsuits against any of the manufacturers of the heartburn medication ranitidine (eg. Zantac, a brand name of the pharmaceutical company Sanofi). As of April 1, 2020, Zantac and other ranitidine products are the subject of an FDA recall. They have been found to contain N-Nitrosodimethylamine (NDMA), a probable human carcinogen, and are suspected of causing cancers of the digestive tract and blood. The recall applies to both over-the-counter and prescription forms of the drug, which was marketed under the brand names Zantac, Deprizine, and the generic Ranitidine. "Already numerous lawsuits have been filed against the companies that manufactured Zantac, many of which have been brought together as a class action in federal court," explains Rory Donadio, founder of Tribeca. "Because Zantac was such a popular and widely distributed drug, many people in the know believe that claims against these companies could number in the tens of thousands and be worth billions," says Donadio. In addition to Sanofi, ranitidine was manufactured and marketed by several dozen companies, including Apotex Corp. (labeled by Walgreens, Walmart, and Rite-Aid), Reddy's Laboratories (labeled by Walgreens, Walmart, CVS, Target, and Kroger), GlaxoSmithKline (GSK), Novitium Pharma, Perrigo Company and Sandoz. For ten years Tribeca has provided litigation funding to plaintiffs in personal injury suits, including those for dangerous drugs and defective medical equipment. Litigation funding, or lawsuit loans, allow someone who suffered injury to obtain an advance on the proceeds they expect to receive on a claim or lawsuit. Says Tribeca's Donadio, "Litigation funding can help a plaintiff cover everyday expenses or pay for medical treatment they would otherwise not get until the case settled or went to trial. Then, if for some reason the claim is denied or the client loses the lawsuit, they're not required to pay back the advance. It's a win all around." To be eligible for an advance on a Zantac claim, it is not necessary to have filed a lawsuit. But it is necessary to file a claim in the Zantac litigation and be able to provide copies of medical records, including a pathology report. To learn more or to file an application, contact Tribeca Lawsuit Loans toll-free at (866) 388-2288 or visit TribecaLawsuitLoans.com.
Commercial

Litigation Finance Continues to Show Strong Returns

 In today’s uncertain financial climate, investors are seeking non-correlated investments and higher returns. As the need for an independent class of assets grows, so do the investments in the Litigation Finance war chest. Litigation funding is insulated from larger financial tides—regardless of what happens in the stock market, with interest rates, etc., litigation assets are not impacted by outside factors. An article in P&I Online details that industry-wide AUM has more than doubled since 2017. A growing pandemic, the central bank stimulus, and the formation of the International Litigation Finance Association all lend urgency and credibility to the practice. Investing in legal funding, however, is not for everyone. Returns can be delayed, invested cash is largely illiquid, and the non-recourse nature of funding means that a total loss is always a possibility.
Consumer

Federal Appeals Court Revives Fraud Action Against RD Legal Funding

A fraud case against legal finance firm RD Legal Funding has been revived by the Second Circuit US Court of Appeals. Allegations include defrauding the families of victims of the 9/11 terrorist attacks in 2001. An article in Bloomberg Law explains that a lower court ruling from 2018 held that the CFPB’s leadership was unconstitutional and beyond fixing—and therefore they dismissed the case. SCOTUS agreed with that assessment, but maintained that the CFPB could continue to exist so long as the president’s ability to fire the director of the agency was preserved. The NY AG’s case against RD Legal continues, and neither party could be reached for comment.
Commercial

Co-Founder’s Arrest Spells Bankruptcy for Las Vegas Tech Company

Invictus Global Management LLC is providing $10 million in funding to cover the legal proceedings of NS8, a Las Vegas-based fraud prevention and cybersecurity company. This week, the company filed for Chapter 11 in a Delaware court. Review Journal explains that NS8 CEO and co-founder Adam Rogas deliberately misstated its revenue, margins, and profitability to investors, the management team, board of directors, and corporate partners. The bankruptcy declaration asserts that about $72 million of the $123 million in investor funds were used to repurchase shares and finance a tender offer. Rogas allegedly helped himself to over $17 million in investor funds under the guise of a share purchase. Rogas was arrested last month on federal charges of using false bank statements to deceive investors. The FBI’s William F Sweeney Jr. noted the irony of a co-founder of a fraud prevention company engaging in fraud himself. The bankruptcy filing is expected to provide time for NS8 to resolve its existing debt.
Commercial

Insolvency Class Action Against Wirecard AG

German payment processor Wirecard has filed for insolvency as of June 2020. This comes after a startling admission that over $2 billion in cash listed on its balance sheets did not actually exist. Unsurprisingly, this led to a share price drop of over 90% over the course of a week—disastrous for those whose pension funds were invested in it by default. ICLG details that a consolidated class action is underway in the US, with more to come in Germany and elsewhere. Allegations include wrongful auditing, market manipulation, and failure to comply with statutory duties. German class actions are ‘opt-in’ and the multiple, parallel cases will utilize third-party funding. The actions are expected to be costly and time-consuming, as they’ll require detailed reviews of trading patterns and perceived losses. Because cases will run concurrently, it may take even longer for creditors to be paid. At the same time, investors will be expected to take an open and active role in the litigation process—largely due to the collective proceedings mechanisms that will be in effect. Unlike class actions in the US, German claimants are treated individually, with separate funding and contractual requirements. Funders for the cases have not been formally announced, so the actual agreement language and costs are not yet known.
Commercial

Funder Milberg Hit with GBP 21K Fine

International litigation funder Milberg Ltd has been fined GBP 21,000 for allegedly mishandling GBP 3MM intended for a class action the firm was not involved in. Initially, the money was meant for a Milberg subsidiary, Ferguson Funding Limited, for a class-action suit against a car manufacturer in a scandal involving emissions. Law Gazette explains that the mishandled monies were received in four separate payments from three different investment companies. The money was returned to the various investment companies in July of last year. The firm admitted that by receiving and making payments from the funds, that they were breaking SRA account rules. The SRA explained that the high fine will likely deter this firm, and others, from committing similar errors in judgment.
Announcements Commercial

Lupaka Submits Request for Arbitration Claim Against the Republic of Peru

Lupaka Gold Corp. ("Lupaka" or the “Company") (TSX-V: LPK, FRA: LQP) reports that it has completed the next step in its international arbitration claim against the Republic of Peru. The Company has now submitted a Request for Arbitration in accordance with Article 36 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) and Article 824 of the Free Trade Agreement between Canada and the Republic of Peru. This announcement is a follow up to Lupaka’s earlier news releases on 16 December 2019 regarding the filing of a Notice of Intent to Submit a Claim to Arbitration and on 4 August 2020 regarding Lupaka entering into a Finance Agreement for its Arbitration Claim Under the Canada-Peru Free Trade Agreement (“FTA”). The Request has been filed with ICSID in Washington D.C., USA. The dispute arises out of Peru’s breaches of the FTA in relation to Lupaka’s investments in Peru. More specifically, the dispute stems from the Republic of Peru’s actions, namely the illegal acts of its subdivision, the Community of Parán, which illegally invaded Lupaka’s project held through Invicta Mining Corp. (“IMC”) and set up a permanent blockade to the site, as well as from the lack of support from the Peruvian police force, prosecutors and central government officials to remove the illegal blockade and restore Lupaka’s rights to its investment. By September 2018, IMC had developed approximately 3,000 meters of underground workings, secured community agreements from communities that own the superficial lands within the project area, completed a 29-kilometer access road sufficient to handle 40-tonne ore trucks and completed numerous metallurgical tests ranging in size from a few hundred to a few thousand tonnes. In September 2018, IMC requested that the final inspection of the completed works take place in order to allow exploitation to begin. In mid-October 2018, just before the final inspection was to take place, the neighboring Community of Parán’s gunmen forced IMC’s personnel from the project’s area including from its offices located at the camp and erected a blockade thereby preventing access to the mine and camp. The blockade was erected on the road built by the mining company and on the Community of Lacsanga’s recorded property. IMC has existing agreements with the Community of Lacsanga. The Community of Parán’s blockade party were often violent and did not hesitate to fire rifles and threaten Lacsanga’s community members and IMC’s employees. Both Lacsanga and IMC requested that authorities assist to remove the blockade and restore access to the mine. This assistance was not provided. Funding for IMC’s development of the mine was provided through a gold loan. During the blockade period, Lupaka was scheduled to have been processing material, creating cashflow and paying down the loan. It was unable to do so because of the illegal blockade. Ultimately, ten months later in August of 2019, with no apparent progress being made in the conflict, the lender foreclosed on the loan and Lupaka lost its entire investment. Lupaka’s loss of IMC and the mine was a consequence of Peru’s acts and omissions. Lupaka has therefore commenced arbitration proceedings against the Republic of Peru seeking compensation in an amount in excess of USD 100 million, to be further quantified during the course of the arbitration. With respect to the arbitration proceedings, Lupaka is represented by the international law firm, LALIVE, and has the financial backing of Bench Walk Advisors. About Lupaka Gold  Lupaka is an active Canadian-based company focused on creating shareholder value through identification and development of mining assets. About Bench Walk Advisors Bench Walk Advisors is a global litigation funder with over USD 250m of capital deployed across in excess of 100 commercial cases. Bench Walk and its principals have consistently been ranked as leading lawyers and litigation funders in various global directories. About LALIVE LALIVE is an international law firm with offices in Geneva, Zurich and London, that specializes in international dispute resolution. The firm has extensive experience in international investment arbitration in the mining sector, amongst others, and is currently representing investors and States as counsel worldwide.
Commercial

Legal Funding for Liquidation Approved in British Virgin Islands

Last month, a commercial court in the British Virgin Islands officially recognized the use of third-party legal funding by liquidators in an insolvency case. The practice had been going on for some time, but this first written ruling on the matter is considered an overt approval of the practice.

Omni Bridgeway writes that the ruling approves the practice of third-party funding, affirming that outdated champerty prohibitions lack relevance in modern court proceedings. Maintenance & champerty, after all, have not been official laws in most of the world since the dark ages.

Justice Adrian Jack, who made the ruling, explained that legal funding is not contrary to existing public policy. In fact, without the funding that allows liquidators to obtain recoveries for creditors, justice would be left unserved. As usual, litigation funding fulfills its promise to increase access to justice.

Several factors might have led to the ruling. In BVI, public policy was already accepting of the practice of legal funding in other matters. No public policy exists that would negate or invalidate the use of litigation funding, or any specific funding arrangement. There’s also the argument that funding, if available to court-appointed managers, should also be available to commercial litigants.

The recent ruling is hardly an outlier. Other jurisdictions are similarly disposed to recognize the value of third-party funding in insolvency cases—including Jersey, the Cayman Islands, and Bermuda. At the same time, Hong Kong, normally welcoming toward the practice of litigation funding, has been reticent to grant approvals for the practice in insolvency cases.

It appears that while courts are essentially welcoming to third-party litigation funding in a variety of circumstances, there will be subtle differences in some jurisdictions.