Investigating and Recovering Assets

By: Timothy Le Cornu and Scott Andersen Published in: INSOL World – Fourth Quarter 2013

When the Liquidator has Limited Financial Means the Liquidator may explore alternative sources of funding rather than bearing the risk of incurring irrecoverable fees and expenses.

Alternative Funding Options
The Liquidator may consider turning to creditors or independent third party funders (“Funders”).  These alternatives are broadly similar.  The Funder advances the Liquidator a non–recourse loan to fund the investigation and in some cases, the general conduct of the liquidation. Such funding is high risk to the Funder as the outcome of the investigation cannot be guaranteed.  The Funder will seek a risk based ‘reward’ for providing funding to investigate and pursue claims from any subsequent recoveries to offset that risk.  The Funder may also require the Liquidator to bear some risk, for example making some fees contingent, to align their economic interests with the overall outcome.  The Liquidator may require an uplift to his usual rates to reflect the risk he is bearing.  Click here to read more.