The New York Law Journal recently published an article on the growing trend of third-party litigation funding in bankruptcy litigation.
Often when there is no cash available under a plan, unsecured creditors are assigned the rights of the debtor to bring avoidance actions and other litigation claims against third parties. These claims have the potential to yield significant value, but only when there are resources available to prosecute the claims. Litigation funding is a tool for maximizing the value of a bankruptcy estate’s litigation claims when the estate itself lacks the resources to pursue the claims and traditional sources of financing are not available.
The article offers an overview of commercial litigation funding in the bankruptcy context. For more detail, visit the New York Law Journal’s website. (subscription required).