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Hedge Funds Showing Increased Interest in Litigation Claims

By John Freund |

It’s no secret that over the last several years, Wall Street has been pouring money into the litigation space – whether indirectly by capitalizing litigation funders, or directly via their own investments into the space. However the recent revelation of Baupost Group’s $1 billion purchase of legal claims against utility company PG&E illustrates both the scope and scale of the hedge fund world’s interest in the legal sector.

As reported in Yahoo News, billionaire Seth Karman’s Baupost Group has long been one of the titans of the hedge fund world. Now Baupost is spreading its wings, having purchased $1 billion of legal claims against utility giant PG&E.

Interestingly, Baupost appears to have purchased the claims as a hedge on its investment in PG&E stock. Klarman’s fund invested in PG&E, which subsequently plummeted over 80% after the California wildfires left the utility company $30 billion in debt and facing imminent bankruptcy.

However, in a process known as subrogation, Baupost also purchased legal claims against PG&E, held by the utility company’s insurer. The hedge fund reportedly paid 35 cents on the dollar for those claims, and now maintains the right to sue PG&E, the very same company it invested in.

Insurance claims are repayable in a bankruptcy proceeding, however Baupost may be in for a bumpy ride to recoupment, given their status as a general unsecured creditor. That classification essentially places them last in line.

This is not the first subrogation claim Baupost has pursued, and it is currently engaged with another similar claim. Sometimes the hedge fund purchases a partial subrogation, and partners with an insurer in the litigation of an entity. All of this shows how far Wall Street is willing to go when it comes to capitalizing legal claims.

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Announcements Commercial

Burford Capital Announces Date for Release of 1Q24 Financial Results and Results Call Registration and Participation Details

By Harry Moran |

Burford Capital Limited ("Burford"), the leading global finance and asset management firm focused on law, today announces that it will release its financial results for the three months ended March 31, 2024 ("1Q24") on Monday, May 13, 2024, at 7.00am EDT / 12.00pm BST.

Burford will hold a conference call for investors and analysts at 8.00am EDT / 1.00pm BST on Monday, May 13, 2024. The dial-in numbers for the conference call are +1 646 307-1963 (USA) or +1 800 715-9871 (USA & Canada toll free) / +44 (0)20 3481 4247 (UK) or +44 800 260 6466 (UK toll free) and the access code is 7684047. To minimize the risk of delayed access, participants are urged to dial into the conference call by 7.40am EDT / 12.40pm BST.

A live webcast of the call will also be available at https://events.q4inc.com/attendee/323980508, and pre-registration at that link is encouraged.

An accompanying 1Q24 results presentation for investors and analysts will also be made available on Burford's website prior to the conference call at http://investors.burfordcapital.com.Following the conference call, a replay facility for this event will be accessible through the webcast at https://events.q4inc.com/attendee/323980508.

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Case Developments Commercial

High Court Finds ‘Reasonable Cause to Suspect’ A1 is ‘Owned or Controlled’ by Sanctioned Russians

By Harry Moran |

Last month, LFJ covered the Bloomberg Law investigation into the activities of Russian billionaires who have been using litigation finance investments to avoid sanctions in the US and UK. These reports have now been further corroborated in the High Court, where a judge has ruled that litigation funder A1 is indeed still under the ownership or control of sanctioned Russian businessmen.

A new article from Bloomberg Law provides an overview of the 3 May ruling in the proceedings for Vneshprombank v Bedzhamov and Kireeva v Bedzhamov, in which Judge Sara Cockerill wrote that “there is reasonable cause to suspect that A1 is owned or controlled by a designated person or designated persons.” Focusing on the sale of A1 for the measly sum of $900, Justice Cockerill said that the financial documentation offered as evidence for the valuation “fails to provide a coherent or robust justification for that figure.” 

Justice Cockerill went on to offer a clinically robust conclusion that “the so called “verification” of the value is broad brush in the extreme and not at all what might be expected by way of professional valuation.”  The ruling did not hold back on ascribing malign intent to the sale, with Justice Cockerill highlighting that as the sale of A1 was made to an employee of the firm, “there are the bases for reasonable cause lying within the structure and timing of the disposal.”The full written ruling from Justice Cockerill can be read here.

Commercial Deals

Manolete Partners Reports Record New Case Investments as Insolvencies Soar

By Harry Moran |

Although it is often the high-profile disputes and large scale class actions that receive the majority of attention in the world of legal funding, those funders who are focusing on insolvencies are recording strong results on the back of widespread economic uncertainty.

An article in Legal Futures covers the recent trading update from Manolete Partners which shows that the insolvency litigation funder is achieving new heights, buoyed by an increase in the number of insolvencies. Manolete’s report showed that the funder had reached a new record of 418 live cases, with 311 of these cases representing new investments for the year ending 31 March 2024. This represented an increase of 18% in new case investments compared to the previous year.

The funder demonstrated that it was not only securing new case investments, but is also achieving strong results in terms of bringing these matters to a close. Manolete’s update reported a total of 251 completed cases for the year, which resulted in £24 million in settlements alongside “a small number of favourable judgments”.

Manolete’s chief executive Steven Cooklin attributed these impressive results to the “highest level of UK insolvencies for 30 years”, citing data from Insolvency Service which showed that in 2023, the volume of creditor voluntary liquidations “as at its highest level since 1960.” Cooklin also highlighted Manolete’s strong financial foundations that have been bolstered by an “amendment financing package with HSBC”, explaining that Manolete’s ability to generate liquidity “provides a strong and efficient financing platform for the business to take advantage of these attractive market conditions.”The full trading and business update can be read here.