Hedge Funds Make Their Move as Litigation Finance Assets Slump

A losing streak in litigation finance is attracting hedge funds and other alternative investment managers looking to invest in legal claims at distressed valuations, according to people familiar with the matter.

Firms working in distressed-debt special situations including Davidson Kempner Capital Management LP and Attestor are looking to buy up such assets at valuations as low as 10 cents on the dollar, the people said, asking not to be identified discussing private deals. In some cases, buyers are taking on distressed assets for free, and agreeing to pay the seller a small amount if the underlying lawsuit wins.

Litigation finance ...