A Paris-seated ICC tribunal dismissed a $680 million claim against Nigeria, funded by Burford Capital, marking another blow to the struggling litigation finance sector. The claimant, Sunrise Power, lacked authority to bind the state, and Nigeria’s attorney-general revealed a pattern of bribes from Sunrise’s founder. Burford, which took the case in 2022 when Sunrise had less than $2,000 in assets, now faces the reality of collecting from an empty shell.
This follows the March reversal of Burford’s $16.1 billion YPF judgment against Argentina, which halved its stock price and forced a $2.4 billion write-down. Australia-based Litigation Capital Management (LCM) also suffered a High Court loss last October, with shares plummeting 60% in a day and 99% from the prior year’s high. LCM reported an A$112 million half-year loss and is now in "orderly run-off," with no new investments and debt repayment prioritized.
The industry’s core problem is its reliance on "fair value" accounting, which treats lawsuits as financial assets valued by management models rather than market prices. This allows firms to report unrealized gains as profits, inflating stock prices. But lawsuits are binary and judge-dependent, not structured credit.
The model only works as long as judges cooperate and investors believe the story.
Fonte: Financial Times Companies · Resumido por HeadlinesBriefing