DISTRESSED DAILY: Harvard Dropout Becomes Lender to the Bankrupt

Eva Shang was 20 when she and a friend decided college wasn’t for them. Specifically, Harvard College. So they quit to raise capital for the company they founded in 2016. By 2019, Legalist, had pulled in $110 million in funding to invest in lawsuits filed by small businesses. When their clients win a case, Legalist makes money.

Now Shang has raised another $50 million for a new venture: lending to small, bankrupt companies. The secret, Shang says, is scouring federal court dockets for borrowers who have enough assets to cover loans of $1 million to about $5 million.

“We ...