Follow the money: Six takeaways on cross-border insolvency and asset recovery

In Lexology's webcast, “Follow the money: Legal finance in cross-border insolvency and asset recovery,” Burford Capital's Quentin Pak and Joe Durkin were joined by Fergal Power (Interpath), Tim Symes (Stewarts) and Andrew Willins KC (Appleby) to examine six key considerations for maximizing recoveries from complex insolvency estates.

Watch the webcast on demand here.

Early investigation and asset preservation are critical to successful recoveries

In complex cross-border insolvencies, the immediate challenge is establishing where value sits, who controls it and whether it can be preserved. With limited resources and incomplete information, practitioners must focus investigations on the most promising recovery opportunities.

Understanding a company's corporate structure, operations and flow of funds is an essential starting point, particularly where assets and records span multiple jurisdictions. As Fergal Power emphasized, establishing who controls assets and whether value has moved beyond the corporate structure can be particularly challenging.

Tim Symes identified four questions that should guide early investigations: What is the claim? Who are the realistic defendants? Where has the value gone? And what can realistically be recovered?

Alongside investigating potential claims, securing records and preserving assets can protect recovery prospects. Pursuing readily realizable assets, such as receivables or available bank balances, may also generate liquidity for further investigations. 
The priority is to focus limited resources on steps that produce useful evidence or protect recoverable value, while retaining flexibility as new information emerges.

Recoverability matters as much as the legal merits of a claim

A strong legal claim does not necessarily translate into a successful financial recovery. In fraud-related insolvencies, assets may have been transferred through multiple entities, converted into different forms or placed beyond the immediate reach of creditors.

“The question isn't simply whether [the] legal claim is good, it's whether there's a realistic route from judgment to recovery. Recoverability has to go hand in hand with merits.”

Tim Symes, Partner, Stewarts

Assessing a claim’s viability therefore requires looking beyond the likelihood of obtaining a favorable judgment. Practitioners and funders must also consider where assets may be located, the costs of pursuing them and whether the anticipated recovery justifies the investment. As Joe Durkin explained, these considerations are central to Burford's assessment of potential legal finance opportunities.

Identifying every recoverable asset at the outset is not always necessary. A credible route to an initial pool of assets may justify further investigation and funding. However, the economics must remain proportionate, with sufficient potential recovery to cover the costs of pursuing the claim and deliver meaningful value to the estate.

Legal finance provides capital, flexibility and strategic advantages

Insolvent estates often lack the resources to pursue valuable claims. Legal finance can provide immediate liquidity, enable litigation and enforcement and reduce the financial risk borne by the estate and its creditors.

Joe Durkin highlighted how legal finance can support complex recovery strategies through flexible financing arrangements tailored to individual claims or multiple matters. Beyond providing capital, Burford's in-house asset recovery team can also support post-judgment enforcement efforts.

Financing can be structured in phases, allowing practitioners to pursue targeted investigations and disclosure applications before committing to full-scale proceedings. As evidence emerges, legal finance providers and officeholders can reassess the merits, recoverability and economics of a claim, directing further investment towards the most promising opportunities.

This flexibility also supports coordinated action across jurisdictions, where investigative and legal steps may need to proceed in parallel or adapt as new information becomes available.

Beyond providing capital, legal finance can offer strategic advantages. Andrew Willins KC highlighted how independent funding can help officeholders demonstrate neutrality rather than relying on financial support from a particular stakeholder. The involvement of an external legal finance provider can also strengthen the case for pursuing proceedings when seeking approval from courts or creditors.

“The fact that a funder has sufficient confidence in the claim that they're prepared to put their money behind it is an extremely powerful tool for an office holder trying to persuade a court, a supervising court or the creditors committee, that the claim is one that should be brought.”

Andrew Willins KC, Managing Partner, Appleby (BVI)

Legal finance can therefore provide more than the capital needed to pursue claims, offering financial flexibility, risk mitigation and strategic support to help maximize recoveries for creditors.

Cross-border recoveries require coordinated tracing, preservation and enforcement strategies

Where assets and corporate entities span multiple jurisdictions, successful recoveries depend on understanding the legal mechanisms available and how they interact.

As Fergal Power explained, insolvency practitioners may need recognition of their appointment to exercise powers abroad, although this does not necessarily provide access to assets or records held by subsidiaries.

Disclosure mechanisms can also play a critical role in tracing assets. Under English law, Norwich Pharmacal orders can help obtain information from third parties involved in relevant wrongdoing, while Bankers Trust orders can assist in tracing assets in which a proprietary interest is claimed. Section 1782 discovery in the United States can provide evidence for use in foreign proceedings, including records of international financial transactions.

Andrew Willins KC highlighted the particular importance of Norwich Pharmacal relief in the BVI, where corporate ownership information may not be publicly available and creditors may need disclosure from registered agents to identify shareholders and beneficial owners.

Used together, these mechanisms can help practitioners trace the movement of assets across institutions and jurisdictions, with evidence obtained in one location informing further investigations elsewhere.

Navigating the practical challenges of cross-border recoveries

Beyond tracing and preserving assets, cross-border recoveries can involve significant practical challenges arising from complex corporate structures, competing stakeholder interests and proceedings across multiple jurisdictions.

The panel highlighted how variable interest entity (VIE) structures in China can complicate an officeholder's ability to exercise control over assets, while companies re-domiciling during enforcement proceedings can create competing claims and jurisdictional conflicts. Regulatory investigations and restrictions on access to information can add further complexity.

These challenges are compounded when different legal teams, creditors and regulators are involved, often with competing priorities. Effective recoveries therefore require careful sequencing of proceedings, clear ownership of responsibilities and a coordinated approach across jurisdictions.

“The challenge [...] is just around rigorous project management on a case, having that one coordinated plan, single control point, clear ownership of workstreams across jurisdictions, that you have proper engagement with the various different parties, the creditors, and also other regulators and stakeholders, and being very, very clear on that.”

Fergal Power, Managing Director and CEO, Asia-Pacific, Interpath

Technology and evolving funding practices are shaping the future of asset recovery

Technological developments, evolving funding practices and the growing significance of digital assets are expected to influence how cross-border recoveries are pursued.

Advances in artificial intelligence and investigative technologies have the potential to accelerate asset tracing, improve analysis of complex financial information and help practitioners develop recovery strategies earlier. However, effectively connecting information across jurisdictions remains critical to successful recoveries.

The panel also anticipated greater involvement from legal finance providers at the investigative stage. Funding preliminary disclosure and asset tracing can help establish the viability of potential claims before the full extent of recoverable value is known.

Digital assets present another emerging challenge. While courts have granted protective injunctions in relation to such assets, Andrew Willins KC noted that uncertainty remains around the practical effectiveness of enforcement strategies.

As cross-border insolvency and asset recovery matters become more complex, successful recoveries will depend on early investigation, effective coordination across jurisdictions and a clear route from identifying assets to realizing value.

Legal finance can support these efforts by providing capital, sharing financial risk and enabling phased investigations and enforcement strategies. Combined with legal expertise and effective coordination, these tools can help insolvency practitioners pursue viable claims and maximize recoveries for creditors.