Bloomberg is the latest to highlight the litigation funding industry’s move into the world of bankruptcy, noting Burford Capital’s recent creation of Bankruptcy Litigation Funding LLC.
“One of Bankruptcy Litigation Funding’s main goals is to provide outside financing to bankruptcy litigation trusts,” writes Bloomberg‘s Stephanie Cumings, who also highlights ILR’s opposition to the practice.
“Third party financing is problematic in bankruptcy for the same reasons it is problematic in other litigation: it encourages abusive litigation by removing risk, hands the reins of decision-making to the funders, and takes a large chunk of the proceeds, in this case from creditors,” said ILR President Lisa A. Rickard.
“This multi-billion dollar industry is unregulated in any corner of the world, and federal rules in the U.S. should require it to be transparent. We continue working to build support in Congress for introducing a bill to bring this activity out of the shadows,” she said.
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