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Commercial

Burford Issues Explanation of Napo Claim

One of Muddy Waters' chief allegations against Burford Capital is that the funder manipulates its financial reporting. The short-seller used the Napo Pharmaceuticals example to illustrate how Burford misreports earnings. Now, after a deluge of investor concern, Burford has released a 7-page explanation of its Napo accounting. According to Proactive Investors, Burford explained its reasoning for logging income from Napo years before the conclusion of the case. According to Burford, the funder was set to secure the greater of two income streams from Napo: either a multiple on its investment, or a share of the winnings of a series of interconnected disputes. Burford further explained its involvement with Jaguar Holdings, the subsidiary which Muddy Waters has argued was established with the sole intention of funding Napo (in part by Invesco, Burford's largest shareholder), so that Napo could eventually monetize Burford's investment in its claim. Burford claims its funding agreement with Napo converted into a debt instrument once Napo lost its Salix claim. That debt instrument later converted into an equity stake in Jaguar, once Napo fully merged with its subsidiary. Jaguar's valuation plummeted, and it was only earlier this year that Burford adjusted its carrying value, once it became clear to management that Jaguar's stock would not recover.
Announcements Commercial

Sérgio Moro Leads Speakers at OffshoreAlert Brazil Conference

MIAMI, Aug. 27, 2019 /PRNewswire/ -- Brazil's Minister for Justice, Sérgio Moro, will give the keynote address at The OffshoreAlert Conference Latin America on Financial Intelligence & Investigations on September 16-17, 2019. Tickets can be purchased now at oacbrazil.com, where you will also find details about our agenda and speakers. Attendees will learn how to detect financial crime, recover hidden assets, obtain litigation funding to pursue claims, file whistleblowing claims, evaluate investment opportunities, and increase their chance of success in high-value, cross-border finance. Network with industry leaders in a stunning, five-star setting. Moro is known internationally for his role as a judge overseeing bribery and corruption cases arising from Operação Lava Jato, a.k.a. Operation Car Wash, including the trial of Brazil's former president Luís Inácio Lula da Silva. He is part of a powerful and influential line-up of speakers that also includes Latin American Herald Tribune publisher Russ Dallen, Brazil's Director of Asset Recovery & International Judicial Cooperation, Erika Marena; judges Paulo Furtado de Oliveira Filho and Moacyr Lobato de Campos Filho, prosecutors Vladimir Aras, Eronides Aparecido Rodrigues dos Santos, and Pedro Lupera Zerpa, politician Hugo Leal, whistleblower Jonathan Taylor, leading fraud and asset recovery attorneys, insolvency practitioners, journalists, and other experts on serious financial crime. Sessions include:
  • An Introduction To International Asset Recovery;
  • Asset Recovery Latin America: Tips From The Experts;
  • Litigation Funding: How to Get Your Multi-Million Dollar Claims Funded By Third Parties;
  • How Latin American Whistleblowers Can Make Millions From US Whistleblowing Programs;
  • Brazil's Whistleblowing Laws: An Analysis of Existing & Proposed Legislation;
  • The Emperor Has No Clothes: The Great Cryptocurrency Scam;
  • Busting the Blockchain: How To Trace & Seize Virtual Assets & Evaluate Risk in a Pseudo-Anonymous World;
  • Data Leaks: What The ICIJ's Panama & Paradise Papers Revealed About Latin America;
  • Corruption & Asset Recovery: The Brazilian Perspective;
  • Allen Stanford: An Update for Latin American Victims;
  • Bankruptcy Fraud in Brazil: The Duties of Trustees;
  • Inside Venezuela: An Overview of Fraud & Corruption;
  • Cross-Border Insolvencies: Chapter 15 & Latin American Equivalents;
  • Investing in Distressed Assets & Legal Claims: What You Need To Know; and
  • Corruption & Money Laundering in Brazil: Problems & Solutions.
The OffshoreAlert Conference Latin America will be held at the magnificent Palácio Tangará hotel in Sāo Paulo, Brazil, on September 16-17, 2019. Presentations will be simultaneously interpreted in English, Portuguese, and Spanish. About OffshoreAlert Launched in 1997, Miami-based OffshoreAlert is the leading provider of investigative information about individuals and businesses operating in high-value, cross-border finance. We offer a subscription-based news and documents service at www.offshorealert.com and hold annual conferences on financial intelligence and investigations in Miami, Brazil, and London. OffshoreAlert has exposed more than 175 fraudulent schemes and helped prosecutors and regulators punish those responsible. FIFA's top officials were exposed at our Miami Conference in 2010 - 5 years before they were indicted for corruption. SOURCE OffshoreAlert

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Commercial Special Features

Why Litigation Finance is Suited to Public Markets

The following was contributed by Nick Rowles-Davies, Executive Vice Chairman of Litigation Capital Management (LCM). The recent and well documented attacks by activist short-seller Muddy Waters on Burford Capital have brought litigation finance into the limelight. Whilst largely focussed on Burford’s accounting methods and corporate governance, the hedge fund’s accusations have raised concerns around the practices and legitimacy of the industry more broadly. One key question raised is around whether funders should even be listed on a public market. More pointedly, why can companies with questionable governance practices, an unpredictable revenue forecast, and operating in an industry with limited access to a secondary market against which claims can be evaluated, be listed? A lot of this is down to varying levels of understanding around Burford’s accounting practices, and indeed those of the wider industry. It is important to recognise that while there are many companies operating in the growing litigation finance space, they do not all do the same thing, or account the same way and shouldn’t all be tarred with the same brush. Fair value accounting – adopted by Burford and others under IFRS 9, is not an evil. But the application of it does matter. There are differing ways of adopting fair value accounting and how it is used is ultimately a management team decision. The accounting treatment for litigation projects varies across the industry and some approaches are more reliant on subjective judgement by management teams than others. For a clear representation, fair value numbers should always be given alongside historical cash accounting figures, so investors and counterparties are able to see the underlying performance of the business. It is vital that funders are fully transparent and have numbers that can be easily verified and valued externally. In practice, this entails the development of a fair value accounting method that can be scrutinised and tested by external parties. This probably results in lower valuations than management may have reached alone. But ultimately, as we’ve seen over the past fortnight, it is prudent to be cautious and conservative. The importance of disclosure to shareholders and clients cannot be underestimated. Subject to the right application of fair value accounting, there are several significant advantages to being listed - relating to transparency, regulation and access to capital - that make it a highly appropriate model for funders. Being listed on any stock exchange ensures a level of regulation and transparency that the private markets do not. We say this with some authority having been listed on both a main market (the Australian Securities Exchange) and the Alternative Investment Market (“AIM”). Our experience has been that there is little difference in standards and accountability between the two. As a constituent of a public market, there is pressure to ensure that standards of corporate governance are upheld. Natural checks exist to hold companies to account in the form of selling investors, analysts publishing negative research, and, at the most extreme level, activists or short sellers publicly targeting companies. What’s difficult is that there is no formal regulation of the litigation finance sector, although its introduction in multiple jurisdictions is inevitable in time. It is hard to predict what form it will take, but I have no doubt that respectable funders will welcome it when it arrives, and we should do. In the meantime, our listed status provides a platform through which we can continue to meet regulatory standards. This is particularly important for firms like LCM looking to fund corporate portfolio transactions. Naturally, sophisticated corporates have stringent KYC protocols, and being listed demonstrates a level of oversight and transparency around where your capital is coming from, often in stark contrast to some. Furthermore, litigation finance is capital-intensive by its very nature and being listed provides funders with access to public sources of capital in the equity and bond markets. Equity raises provide funders with permanent capital to invest from the balance sheet, thereby avoiding any potential liquidity mismatches that might occur with some alternative fund structures. It also means investors of all types (from institutions to individuals) can gain access to the asset class’s attractive, uncorrelated returns. There will be a failure in this industry soon. This will be in large part due to the use of contingent revenues to hide loss positions, as well as funders being over reliant on one part of the market, such as single case investments. This is clearly not a sustainable business model and further illustrates the need for the considered use of fair value accounting. Recent events have been no help to the ongoing education process around the benefits of legal finance generally. It is a rude awakening that the practices of one business in our industry have raised so many questions around the governance and reporting of its peers. It will take time for the jitters to settle. In the meantime, the regulatory oversight that being a listed company provides should be seen as a positive. Nick Rowles-Davies is Executive Vice Chairman of Litigation Capital Management (LCM) and leads the company’s EMEA operations.
Commercial

New Jersey Court Reaffirms Litigation Funding in Woodsford IP Claims

In the case of WAG Acquisition, LLC v. Multi Media LLC, Civil Action No. 2-14-cv-02340, a New Jersey court has reaffirmed that the pursuit of litigation funding by a plaintiff - in this case a partnership with Woodsford Litigation Funding - does not harm standing. As reported in Nat Law Review, WAG Acquisition owns a pair of patents related to streaming media buffering systems, which it sought to enforce in a series of 10 disputes against various adult website operators. Several defendants sought to remove WAG's standing given the litigation funding agreement with Woodsford. The funding agreement gave Woodsford right of first refusal on any potential claim, but allowed WAG to pursue any claim which Woodsford refused fund. Only WAG could initiate a claim, yet Woodsford maintained the right to reject any settlement offer. Should WAG and Woodsford disagree on whether or not to settle, a third party expert would be entrusted to make a binding decision. Woodsford is entitled to less than 50% of any damages claim, though it maintains first payout. And should WAG default, the patents themselves are transferred to Woodsford. Based on these terms, the defendants argued that the funding agreement transferred significant rights to Woodsford - so much so, that WAG lacked standing to enforce its patents. They argued that Woodsford essentially controlled the litigation, and that Woodsford's involvement necessitated negotiation with a non-party entity - one that had ownership rights in the patents no less, given that they'd be transferred to Woodsford should WAG default. However the court rejected those claims, on the basis that Woodsford cannot compel WAG to settle (Woodsford can only reject a settlement offer, and prompt a third party's binding decision). Additionally, Woodford's interest in WAG's patents do not amount to ownership, only a security on its investment. The court's decision reaffirms a plaintiff's standing with respect to seeking a funding agreement - even one with some (arguably) onerous terms.
Announcements Commercial

EQUITY ALERT: Rosen Law Firm Files Securities Class Action Lawsuit Against Burford Capital Limited

NEW YORK--(BUSINESS WIRE)--Rosen Law Firm, a global investor rights law firm, announces it has filed a class action lawsuit on behalf of purchasers of the securities of Burford Capital Limited (OTC: BRFRF, BRFRY) from March 18, 2015 through August 7, 2019, inclusive (the “Class Period”). The lawsuit seeks to recover damages for Burford investors under the federal securities laws.
To join the Burford class action, go to http://www.rosenlegal.com/cases-register-1647.html or call Phillip Kim, Esq. toll-free at 866-767-3653 or email pkim@rosenlegal.com or cases@rosenlegal.com for information on the class action. NO CLASS HAS YET BEEN CERTIFIED IN THE ABOVE ACTION. UNTIL A CLASS IS CERTIFIED, YOU ARE NOT REPRESENTED BY COUNSEL UNLESS YOU RETAIN ONE. YOU MAY RETAIN COUNSEL OF YOUR CHOICE. YOU MAY ALSO REMAIN AN ABSENT CLASS MEMBER AND DO NOTHING AT THIS POINT. AN INVESTOR’S ABILITY TO SHARE IN ANY POTENTIAL FUTURE RECOVERY IS NOT DEPENDENT UPON SERVING AS LEAD PLAINTIFF. According to the lawsuit, defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (1) Burford has been manipulating its metrics, including ROIC and IRR, to create a misleading picture of investment returns to investors; (2) these manipulations hid the fact that the Company is at high risk for a liquidity crunch and is already arguably insolvent; and (3) as a result of the aforementioned misconduct, Defendants’ statements about Burford’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than October 21, 2019. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to join the litigation, go to http://www.rosenlegal.com/cases-register-1647.html or to discuss your rights or interests regarding this class action, please contact Phillip Kim, Esq. of Rosen Law Firm toll free at 866-767-3653 or via e-mail at pkim@rosenlegal.com or cases@rosenlegal.com. Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm or on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm. Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 3 each year since 2013. Rosen Law Firm has secured hundreds of millions of dollars for investors.

Contacts

Laurence Rosen, Esq. Phillip Kim, Esq. The Rosen Law Firm, P.A. 275 Madison Avenue, 34th Floor New York, NY 10016 Tel: (212) 686-1060 Toll Free: (866) 767-3653 Fax: (212) 202-3827 lrosen@rosenlegal.com  pkim@rosenlegal.com  cases@rosenlegal.com  www.rosenlegal.com
Commercial

How GCs Can Benefit from Litigation Finance in the Current Economic Environment

Study after study shows that General Counsel are growing more and more interested in the product of litigation finance, yet the adoption rates remain low. There are numerous hurdles, not the least of which is cultural: many GCs simply retract from the idea that their role and responsibility should transform from cost container to revenue producer. That said, given the shifting economic climate, it's worth taking another look at how litigation funding can benefit GCs and the balance sheets they are entrusted to safeguard. As reported in Crypto Coin Discovery, litigation finance helps move risk off the corporate balance sheet - not just litigation risk, but interest rate risk as well. Rates have whipsawed over the last year, and it's getting more and more difficult to predict Fed moves and future outcomes. So if corporates want to hedge their bets here, freeing up capital by engaging with litigation funders is a terrific option, and one that provides increased flexibility as the interest rate environment continues to fluctuate. Additionally, litigation finance is growing more sophisticated. Defense-side funding is slowly-but-surely evolving, and this is likely to spur more corporate interest. As corporates begin to bundle portfolios of plaintiff-side claims with defense-cases, expect the GC community to take notice. It's one thing to try to sell GCs on the idea of turning a cost center into a profit center, it's quite another to sell them on expanding their cost center, which defense-side funding is capable of achieving. All of this comes in addition to the accounting and operational benefits that corporations accrue when engaging with funders. When times are good, perhaps these benefits are less substantial. But with the global economy on shaky ground, GCs should certainly take a closer look at all of their options.
Announcements Commercial

Second Annual Litigation Finance Dealmakers Forum to Be Held on September 18-19 in New York City

NEW YORK--(BUSINESS WIRE)-- Premier Event in Litigation Finance to Feature Innovative Program, One-to-One Meetings, Industry Leaders, and Keynote Speaker Stephen Susman

Amid continued growth and developments in the litigation finance market, the leading companies and executives in the industry will convene at the Second Annual LF Dealmakers Forum to be held in New York on September 18-19. The keynote speaker will be Stephen Susman, one of the nation’s top trial lawyers and founder of Susman Godfrey, a nationally recognized firm specializing in high stakes litigation.

Two hundred executives are scheduled to attend the highly anticipated LF Dealmakers Forum, which has quickly become the signature gathering in the litigation finance space and builds on the success of the inaugural event last year. The exclusive event will be attended by a hand-selected group that includes leading executives from law firms, litigation finance firms, corporations, institutional investors, and advisors.

The forum will feature a mix of interactive sessions, roundtable discussions, and case studies designed to provide attendees with insights into deals, data, and regulatory trends.

LF Dealmakers Forum will also provide attendees with exclusive opportunities to expand referral networks and discuss new business through thirty-minute one-to-one meetings. More than 150 meetings were scheduled at the inaugural LF Dealmakers Forum last year.

“This was the “go-to” conference for litigation funding. The speakers were prepared, the content was strong, and the participants wanted to connect with each other,” said Collin Cox, Partner, Yetter Coleman LLP, following the conclusion of the inaugural event.

A-list attendees include top executives from sponsoring companies such as Longford Capital, Mintz, ME Group, Bentham IMF, Brown Rudnick, Burford, Curiam, Validity, Westfleet Advisors, the D. E. Shaw Group, Houlihan Lokey, HTS, Parabellum, and Therium.

“The LF Dealmakers Forum really delivered on all fronts from the opening keynote to the closing remarks,” said Brian Haan, Partner, Lee Sheikh Megley & Haan about last year’s event. “Candid panel discussions with leading financiers, executives, academics, and attorneys provided invaluable insight through topical debate.”

For more information about the Litigation Finance Dealmakers Forum and to apply for attendance at the limited seating event, please visit https://lfdealmakersforum.com/.

Media and other partnership inquiries may be directed to Wendy Chou at 718-812-6707 or wendy@dealmakersforums.com.

About Dealmakers Forums

Dealmakers Forums specializes in high interaction conferences that bring together select groups of forward-thinking, global executives for meaningful dialogue, debate and dealmaking. Developed in collaboration with industry leading practitioners, our events present timely issues that matter, real case studies, A-list speakers, and our signature one-to-one meetings. For more information about Dealmakers Forums and the 2019 schedule, please visit our website.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190821005329/en/

Announcements Commercial

Legal-Bay Opens Nationwide Commercial Litigation Funding Division

LOS ANGELES, Aug. 20, 2019 /PRNewswire/ -- Legal-Bay LLC, the Lawsuit Settlement Funding Company, announced that they have launched a new lawsuit finance division for commercial litigation, lawsuit loans or advances, and attorney loans for law firms. Commercial litigation cases can be extremely complex and require expansive resources for both plaintiffs and law firms to fight. Legal-Bay feels this is an under-served market and plans to build a new division to accommodate the needs in the market. Commercial litigation loans were created to assist plaintiffs level the playing field against deeper pocket defendants, who can simply outspend them and make winning a case more difficult. Legal-Bay's experience involving complex litigation will give hope to plaintiffs and middle market law firms that resources are available to prosecute a successful claim. Chris Janish, CEO of Legal-Bay, commented, "We are exciting to be expanding from our traditional personal injury and mass tort litigation to much larger commercial litigation involving complex cases that need large funding amounts. Typically, these cases have minimum requests of anywhere from $100K to $20MM and take more time to evaluate, and our network of experienced underwriters and investment bankers are eager to begin funding. We believe this is a service that will aid many plaintiffs and law firms in their quest for justice." Legal-Bay has outlined a nationwide network of outside consultants and strategic partners to properly service their clients. Their network involves organizations from New York NY, New Jersey NJ, Texas TX, Florida FL, Arizona AZ, Nevada NV, California CA, Illinois IL, Minnesota MN, Pennsylvania PA, and Connecticut CT. Legal-Bay currently funds car accidents, personal injury cases, wrongful termination, medical malpractice, clergy sex abuse, discrimination, trips and slip and fall cases, mass tort litigations and many commercial litigation cases. However, the commercial litigation funding division will focus on larger commercial litigation cases or products such as: Whistleblower or Qui Tam Cases, Breach of Contract, Executive Wrongful Termination Cases, Judgment or Verdict on Appeal Cases, Attorney or Law Firm Loans or Financing of Case Costs up to $20MM, Intellectual Property Cases, Estate or Partnership Unwinds, Franchise Protection, Franchise Protection, Security Fraud or Finra Arbitration Cases, Real Estate Cases, Partnership Fraud, Insurance Bad Faith Claims, Patent or Copyright Infringement Cases, Hospital or Surgery Medical Malpractice, Wrongful Death, and any large civil lawsuits where the plaintiffs have already filed complaints.    If you are looking for pre-settlement cash from your commercial litigation lawsuit, large lawsuit loan for general working capital, or to inquire about specific case costs, please apply at: http://lawsuitssettlementfunding.com Legal-Bay has now secured additional funding capital for these and other types of commercial litigation cases, and encourages plaintiffs or law firms that have been denied funding in the past not to be discouraged about applying with Legal-Bay. Most of Legal-Bay's commercial litigation funding programs are non-recourse lawsuit cash advances, also known as case funding. None of the programs should be considered to be a lawsuit loan, lawsuit loans, pre-settlement loans or a pre settlement loan; however each funding amount is different and traditional lawsuit loan terms may apply depending on the type of funding and jurisdiction. To learn more, or to apply for a commercial litigation cash advance, please visit: http://lawsuitssettlementfunding.com or call: 877.571.0405 where agents are standing by to hear about your specific case.  
Commercial

There is Now a Litigation Funder Solely Focusing on IRS Whistleblower Claims

The average IRS whistleblower claim takes more than eight years to pay out, if they pay out at all. That's a huge gamble, but one that isn't stopping one new litigation funder, whose brand new fund is solely devoted to funding IRS whistleblower claims. According to Bloomberg, Charles Middleton is a former senior tax executive who has blown the whistle on a pair of prominent ex-employers: Walmart and Oxbow Carbon (owned by Bill Koch). Middleton is still waiting for a payout in each claim, but his experience as a whistleblower has prompted him to form his own litigation fund dedicated to the niche legal sector. Middleton says his experience as a tax expert differentiates him from other litigation funders who are all ex-lawyers or finance professionals. That said, it's not like Middleton will have a ton of competition in the space, since many funders wouldn't touch an IRS whistleblower claim given the exorbitantly lengthy time-to-settlement. However, the claims themselves can provide enormous paydays. In 2018, the IRS paid out nearly $300 million on just 217 claims. The largest payout was over $100 million to a former UBS banker who blew the whistle on his employer's tax shenanigans. One challenge in funding such claims is that the IRS tends not to disclose case information to whistleblowers, which makes it nearly impossible to judge whether a payout is likely. However, The Taxpayer First Act was recently signed into law, and seeks to compel the IRS to be more forthcoming with a claimant's case progress. Another challenges is the structure of the funding agreement. Funders can't purchase a portion of the claim itself, or risk regulatory backlash. So they either provide working capital to the whistleblower or the attorney. Middleton's fund - Tax Truth Capital - will fund the whistleblowers, not their attorneys. And he will target claims that are very mature, since those more than eight years in progress are likely to be meritorious. According to Middleton, there are nearly 5,000 such claims across the U.S.