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Funding corporate rescue in Asia: Litigation financing

Harneys published an article by Burford Senior Advisor Rupert Purser:

The financing of single, high-value claims held by distressed and insolvent entities is a budding practice offshore and in Asia. But there are further ways in which litigation finance can be used in corporate rescue. Provided that legal claims have a realizable value sufficient to secure the borrowing, capital provided by a litigation financier can be used for any business purpose – and represent a much-needed source of working capital.

Litigation financing is generally provided on a non-recourse basis and is secured by the legal claims only. Consequently, the financing will not distort incumbent creditors’ rights or restrict them from further funding the administration. Because litigation financiers do not control the conduct of litigation, their investments do not complicate the turnaround or insolvency practitioner’s conduct over claims and asset recovery.

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