Insolvency – Litigation Funding Agreements – Liquidator

Insolvency – Liquidator – Litigation Funding – Decision of Federal Court of Australia – May be useful for LegalPay Company which is in the forefront of litigation funding in the country and also to others

FCA has recently approved the liquidator’s entry into funding agreements through market  – Why not in India?

There is no express statutory or regulatory bar to the Third Party funding in India.   In UK, Hong Kong and Singapore, there is legislation to provide for TPF in arbitration proceedings.  The Code of Civil Procedure as amended by few States in India permit financing of litigation costs of the plaintiff.

Time has come for TPF not only in Arbitration, Insolvency but also in every litigation.

Secured Creditors of Ralan Property Services Pty Ltd had appointed receivers over its assets.  However, the liquidators did not have funds.  The secured creditors did not fund the proceedings.  The Liquidators approached the market.  Two companies had agreed to fund the proceedings.

The Liquidators approached the Federal Court of Australia for approval.   

The Federal Court of Australia in its judgment dated 26.6.2023 in Jahani, in the matter of Ralan Property Services Pty Ltd (receivers and managers appointed)(in liq) (2023) FCA 738, approved litigation funding agreements and legal retainers, amongst others, having regard to “the potential valuable return to the creditors”