This guide provides an overview of the evolving litigation funding landscape for insolvency practitioners (IPs) and explores the range of funding structures available to support insolvency claims where estate funds are limited. As the market has developed, IPs now have greater flexibility in selecting funding solutions that align with the value of the claim, the estate's financial position and the desired balance between risk, cost and potential recovery.
The guide explains the key differences between conditional fee arrangements (CFAs), damages-based agreements (DBAs), third-party litigation funding and claim assignment, highlighting how each structure allocates costs, risk and control of the litigation. It also considers the role of after-the-event (ATE) insurance in managing adverse costs exposure, as well as examines the commercial factors that funders and assignees typically assess when deciding whether to support a claim.
Recognising that there is no single solution for every insolvency claim, this guide outlines the circumstances in which each funding option may be most appropriate. It emphasises the importance of considering the legal merits, anticipated costs, potential recoveries, timing and stakeholder appetite for risk when determining the most suitable approach. By understanding the full range of available funding and assignment options, insolvency practitioners can make informed decisions that maximise value for creditors, while minimising financial exposure for the estate.
