Litigation Capital reports positive progress on two investments
By Josh White
Date: Tuesday 20 Dec 2022
(Sharecast News) - Dispute finance specialist Litigation Capital Management announced positive progress on two of its investments on Tuesday.
The first was a successful judgement in an investment in an English court litigation to which it provided a finance facility in June.
It said it provided the finance to Geoffrey Carton-Kelly, a partner of FRP Advisory, the additional liquidator of CGL Realisations, formerly known as Comet Group, with the finance forming part of LCM's 'Fund I' portfolio.
In November, judgement in the High Court was awarded in favour of Carton- Kelly for £110m.
"This judgement is understood to represent the largest ever value preference claim successfully brought under the UK's 1986 Insolvency Act," Litigation Capital said in its statement.
"The defendant to the proceeding has obtained permission to appeal the judgement, which will delay the maturity of the investment, but will be paying the judgement amount into court.
"This investment has been significantly de-risked from both a merits and recovery risk perspective."
Litigation Capital said the financial performance of the investment was protected against the passage of time by way of an increasing multiple of invested capital.
It added that the size of the investment was "within the median range" for an investment within Fund I.
Additionally, and after recent press speculation, the company updated the market on another Fund I investment involving claims against Poland under both the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty, which had now been heard by an arbitral tribunal.
Following completion of the hearing, the tribunal would render an award in due course.
"There is no specified date for an award to be rendered and there is no certainty as to what the outcome of that award will be," the board said.
In line with its revenue recognition, the company said it would only recognise revenue associated with the matters at the point it had more certainty on the final outcome, including following any appeal where relevant, or when there was more clarity around the recovery of funds.
The directors said they remained "confident" that, with respect to the two awards it updated on, they would generate returns in line with expectations, notwithstanding that the timing within which each award would be realised remained uncertain.
Litigation Capital said it generally expected the duration of investments to increase to between 36 and 42 months.
"We are pleased with the significant progress on these key investments," said chief executive officer Patrick Moloney.
"The successful judgement in the High Court of England demonstrates LCM's strength in project selection and we look forward to reporting further once each of these investments has reached a conclusion."
At 1442 GMT, shares in Litigation Capital Management were up 7.47% at 70.18p.
Reporting by Josh White for Sharecast.com.
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