Litigation Funders See Growing Opportunities in Bankruptcy Boom

Litigation finance is working its way into corporate bankruptcy proceedings as Chapter 11 cases pile up, enabling more lawsuits and strengthening plaintiffs’ claims against third parties who may have caused or worsened a bankrupt company’s distress.

The nascent but growing $13.5 billion industry, in which outside investors pool money into lawsuits in exchange for a portion of any award that results, is encountering its first US corporate bankruptcy boom. A wave of new bankruptcies could be rife with opportunities to invest in legal claims.

“I think the level of activity rises and falls with the amount of bankruptcy activity we ...