Insolvency Funding in Hong Kong and Singapore—Key Developments

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.

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.