Burford Capital’s Court Loss Puts Focus on Financial Options

Burford Capital Ltd.'s major court loss opens the door for paths to a stronger balance sheet, even as the litigation funder touts a “healthy” core business while preparing to announce a value write-down.

The US Court of Appeals for the Second Circuit on March 27 reversed a ruling that ordered Argentina to pay $16.1 billion to investors over the seizure of state-run oil company YPF SA. Burford stood to win a large share of the award before the reversal because it funded the investors’ lawsuit.

Burford said in the aftermath of the ruling it will write down the value of YPF previously tabbed at $1.7 billion. The write-down, which the company will detail when it releases first quarter earnings in the first half of next month, could affect Burford’s ability to take on new debt and maintain an ambitious growth target it had previously projected.

The situation makes the time right for Burford to consider options such as a secondary transaction that would let existing investors offload risk, a preferred equity raise to bring in new capital, or possibly even job reductions to save funds, analysts said.

“They do need to think about these various paths and think about capital structure options just because time is of the essence,” said Gian Kull, an investor in legal assets who previously managed the UK portfolio for rival litigation funder Omni Bridgeway. “But there is also a lot of wiggle room they have that they can play with.”

Burford had more than $700 million in cash and equivalents and marketable securities as of the end of 2025, the company has said. The litigation funder also had a group-wide portfolio of $7.5 billion, and in January the company said it planned to double the size of its core portfolio by 2030.

“We have never relied on cash proceeds from YPF to fund or grow the core business,” Burford CEO Christopher Bogart said in a March 30 statement, which also stated that growth plans don’t rely on debt in the short to medium term. “The core business is healthy, growing well and has produced consistently high asset returns.”

Burford declined to comment.

Possible Strategies

A secondary transaction—when an early investor sells shares to a new backer—is one opportunity for Burford after the court loss, said Ben Smyth, a founder of Lacuna Litigation Advisory, which provides consultancy services to legal asset investors.

Such a strategy would allow Burford to “obviously still communicate growth,” Smyth said. “You can basically offload some of that risk and some of the future deployment exposure.”

Omni Bridgeway announced in December 2024 that alternative asset manager Ares Management Corp. acquired a stake in its ongoing investments in a secondary transaction. Under the agreement, a new fund was created to include more than 150 Omni investments, and Ares acquired a 70% interest in the new fund for A$310 million ($221.8 million).

The public nature of the court reversal could affect its ability to negotiate a secondary, Smyth said. Burford would need to be certain that it doesn’t appear to be making such a move from a position of weakness, he said.

Another option is a preferred equity raise, because selling assets could prove difficult given Burford’s balance sheet stress following the court loss, Kull said.

“They’re obviously strongly incentivized to create as much optionality as possible in the asset to give themselves as much headroom as possible,” he said. “But it’s still not as much headroom as they had before.”

Potential Downsize

Burford, which employed 172 people as of the end of 2025, has more workers than it needs, and reducing headcount could be an option for the company, two former employees of the company said. They requested anonymity to discuss specifics of their former employer.

“I would see this as frankly an opportunity,” one of the former employees said, adding that Burford has a chance to “right size.”

Smyth said Burford operates in a large number of markets and that the company could consolidate those offices “to try to alleviate some of that cash pressure,” he said.

Meanwhile, Burford is considering legal options following the court loss.

It could seek a rehearing by the entire Second Circuit, US Supreme Court review, and treaty arbitration. The company will likely do a probability-weighted assessment as to the value of the case related to those three legal options, according to Smyth.

Burford said in its March 30 statement that en banc and Supreme Court proceedings are unlikely to be successful and that the company is much more optimistic about international arbitration. On Wednesday, former YPF investors told the trial judge that they intend to pursue international treaty arbitration along with further appeals.