Burford Capital has announced a £9m insolvency funding deal with accountants Grant Thornton, in what is believed to be the first arrangement of its kind.
A spokesman for Burford said the portfolio funding deal was unique in covering all claims by and against an estate where Grant Thornton partners were trustees in bankruptcy, rather than being limited to legal fees.
He said this could include defence costs, declaratory matters and administration costs.
Grant Thornton partner Nick Wood said the firm wanted the “entire range of matters funded” and the deal included a “huge amount of flexibility”.
He went on: “Without a portfolio solution, we would be left trying to deal with the cases on a one-by-one basis in a much less streamlined way, and trying to agree different types of deals including CFAs.
“What Burford provided is a significant step away from traditional third-party funding and towards a bespoke financing arrangement that is tailored to the needs of the estate.
“Ultimately, without this arrangement we could not have proceeded as we had wanted and that would have affected the creditors adversely.”
Nick Rowles-Davies, managing director of Burford Capital (UK), said: “When you’re an office-holder in an insolvency situation, you’re personally liable if you bring litigation, but who’s going to pay you?
“This innovative structure allows you to get paid, and the lawyers, using the value of the litigation. Office-holders’ costs in bringing the action, their time and effort, are included.”
He went on: “This is arguably the first deal of its kind in insolvency, particularly incorporating capital availability for defence and non-claimant cases and the use of financing for the officeholders’ ongoing fees.
“We also believe that bespoke portfolio financing arrangements providing for the officeholders’ fees will start to become more frequent in Burford’s work in the insolvency space. “