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Legal Finance and Risk Management

Stubborn judgment debtors routinely look for ways to delay or increase the cost of collection. Aided by a vibrant “asset protection” industry in certain U.S. jurisdictions, they frequently turn to LLCs in those jurisdictions to retain the benefit of their property while shielding it from creditors, hoping that enforcement courts will defer to those states’ LLC acts and prevent turnover of membership interests. But a recent decision by the U.S. Court of Appeals for the Second Circuit provides some reason for optimism that, at least for debtors subject to personal jurisdiction in New York, these corporate shell games may not be entertained by courts in America’s financial hub.

In-house legal counsel are key members of corporate teams and are often responsible for managing credit and insolvency related risks faced by their organizations. Particularly when insolvency and litigation risks converge, in house lawyers play a critical role in helping corporations make strategic decisions to optimize value. The following cases demonstrate how funding can provide unique and flexible solutions for both debtors with affirmative litigation claims and creditors with claims against insolvent corporations.

In Australia, dispute finance has long been associated with class actions and access to justice. However, a paradigm shift is underway as well-heeled corporates begin to recognise the broader applications of dispute finance, particularly how it can be used as a sophisticated corporate finance and risk management tool.