Ways in which an IP can fund litigation and investigations where there are no assets in the estate
Produced in partnership with Joseph Carney of Three Stone
Ways in which an IP can fund litigation and investigations where there are no assets in the estate

The following Restructuring & Insolvency guidance note Produced in partnership with Joseph Carney of Three Stone provides comprehensive and up to date legal information covering:

  • Ways in which an IP can fund litigation and investigations where there are no assets in the estate
  • Funding concerns
  • Litigation risks
  • Litigation funding—the current position
  • Maintenance and champerty
  • Funding methods

Funding concerns

In considering whether to institute a claim, aside from consideration of the merit of the claim, two particular issues present themselves:

  1. how the claim is going to be funded

  2. how litigation risk (such as adverse costs) is going to be managed

Litigation funding refers to a range of methods that deal with both of these issues. Their particular implications in this Practice Note are with reference to liquidators, although very similar issues arise with respect to trustees in bankruptcy and administrators.

The funding issue is of obvious importance where there is an insolvent estate. The liquidator must be able to fund:

  1. their own expenses, the expenses of the solicitors they instruct, and disbursements for counsel and experts

  2. a security for costs order, given that one will be most likely be sought, and

  3. any adverse costs order

An adverse costs order has priority over the general expenses of the liquidation, including the liquidator’s own expenses. Accordingly a liquidator may be left out of pocket if no proper provision has been made for an adverse costs order.

Litigation risks

Litigation risk arises because litigation carries with it two key risks:

  1. the risk that the claim will fail or only be partially successful and adverse costs orders will be made, diminishing the funds available for distribution to creditors

  2. the risk that, although