Funding arbitral pursuit of milestone-based earn-outs

Challenge: Post-M&A shareholder earn-out dispute 

A group of shareholders, including several private equity investors, filed a claim against the purchaser of 100% of the shareholders’ company, claiming that the milestone-based earn-out payments the shareholders were promised as part of the sale had not been honored.  

Solution: Financing legal fees and expenses for arbitration

The shareholders wanted to move quickly without using additional capital of their own, and Burford’s ability to provide expedient case review and in-house diligence process made that possible. Burford provided funding for the arbitration proceedings, including adverse costs protection via an after-the-event (ATE) insurance solution. Without external funding, it would have been difficult for the shareholders to finance this arbitration without raising additional capital of their own.

Impact: Tribunal victory for shareholders

The arbitration tribunal found in the claimants’ favor, awarding significant damages and ordering the defendant to bear its own legal costs in full. Following the award, set-aside proceedings are pending, and Burford has agreed to supplement its existing commitment to defend the successful award.

Capital provided by Burford allowed the shareholders to prove the defendants’ wrongdoing, as well as recover some of the funds that defendants would otherwise have been unwilling to pay out