Third-Party Litigation Funding: Bankruptcy and Insolvency

Summary

This practice note outlines the law on third-party litigation funding generally, with a particular emphasis on litigation funding in the insolvency context. This practice note covers such topics as the purpose behind third-party litigation funding, how such finding works, whether court approval is necessary, the different types of litigation funding agreements, selecting the lender, negotiation the agreement and potential issues that may arise. It also indicates where the practice might differ in other contexts, such as in class proceedings or general commercial litigation outside of insolvency. It does not consider the use of contingency fee arrangements, where the third-party funding the litigation is a party's lawyer, or the use of third-party litigation funding in arbitration proceedings.