Maximising recovery of NRRAs through Litigation Funding

Maximizing Recovery of Non-Readily Realisable Assets: A Strategic Approach through Third-Party Funding

Introduction:

In the realm of insolvency and liquidation proceedings, Non-Readily Realisable Assets (NRRAs) pose significant challenges. These assets, which defy easy disposal through conventional channels, require innovative strategies for recovery. One promising avenue is the utilization of third-party funding (TPF), which offers financial support for complex legal disputes involving NRRAs. This article explores the nature of NRRAs, delves into the benefits of TPF, and provides strategic insights into leveraging TPF to maximize recovery outcomes.

Understanding Non-Readily Realisable Assets:

NRRAs encompass a diverse range of assets that are difficult to realize through traditional means. These include arbitration claims/awards, avoidance transactions, claims against personal guarantors, unrealized debtors/receivables, loans and advances/security deposits, intellectual property rights (IPR), obsolete inventory/stock, deferred tax assets, and litigation rights in other real assets. Each category presents unique challenges and complexities, making their recovery a formidable task.

Introduction to Third-Party Funding for Non-Readily Realisable Assets:

Third-party funding (TPF) has emerged as a viable solution for financing legal disputes involving NRRAs. Unlike traditional funding methods, TPF provides financial support on a non-recourse basis, meaning funders only receive payment upon a successful outcome. This arrangement mitigates the financial risk for litigants and enables them to pursue their claims without bearing the full financial burden themselves.

Leveraging Litigation Funding for Non-Readily Realisable Assets:

TPF offers a strategic advantage in unlocking the value of NRRAs. By providing financial support for legal proceedings, TPF enables claimants to pursue their claims effectively, even in complex litigation scenarios. Case studies and strategic insights demonstrate how TPF can maximize recovery outcomes for various types of NRRAs, including arbitration claims and claims against personal guarantors.

Key Considerations in Seeking Litigation Funding:

When pursuing TPF for NRRAs, several key considerations must be taken into account. These include assessing the strength of the underlying legal claim, maintaining transparency with funders, and collaborating with experienced professionals.

Structuring TPF Agreements:

Effective structuring of TPF agreements is essential to protect the interests of all parties involved and mitigating conflicts of interest are critical factors to consider in maximizing the effectiveness of TPF. This involves outlining clear terms and conditions, maintaining autonomy over decision-making, and resolving disputes in a timely manner. Strategies for portfolio-based funding approaches are also discussed, highlighting the advantages of aggregating multiple cases into portfolios for enhanced financing opportunities.

Benefits of Collating Portfolios for Third-Party Funding:

Aggregating multiple cases into portfolios offers distinct advantages, including risk diversification and enhanced financing opportunities. By grouping cases, stakeholders can optimize funding efficiency and pursue projects that may be deemed too risky as standalone ventures. Practical insights into structuring portfolio-based funding approaches are provided, emphasizing the importance of strategic planning and collaboration.

The Future of Third-Party Funding for Non-Readily Realisable Assets:

As the landscape of litigation funding continues to evolve, there is a growing focus on NRRAs. Future trends and opportunities in TPF for NRRAs are being discussed, including increased scrutiny, creative financing structures, and advancements in risk assessment models. The Asset Reconstruction Companies (ARCs) have a special role in leveraging TPF for asset recovery on account of their strategy of aggregation of assets and quick decision making.

Conclusion:

In conclusion, TPF presents a strategic opportunity for maximizing the recovery of NRRAs within insolvency and liquidation proceedings. By adopting innovative funding solutions and collaborating with experienced partners, stakeholders can unlock the latent value of NRRAs and streamline asset realization processes for optimal outcomes.

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