How the Litigation Funding Claim Developed

To understand the weight of the ruling, it is essential to look at how this litigation funding claim emerged. Burford Capital, one of the world’s largest litigation funders, agreed in 2022 to finance antitrust claims brought by Harvest Sherwood. Those claims targeted major meat industry producers accused of conspiring to inflate prices for chicken, pork, and beef products. Allegations that have fueled numerous lawsuits nationwide.

The funding deal provided Harvest Sherwood with the financial backing needed to pursue an estimated $1.1 billion in potential damages. In return, Burford expected repayment from any settlement or judgment, plus a return on its investment. However, the distributor’s financial situation worsened, and by May 2025, Harvest Sherwood filed for Chapter 11 bankruptcy protection. That filing reshaped the legal landscape for every creditor involved, including Burford.

Soon after the bankruptcy began, Burford asserted that its 2022 agreement functioned as a secured loan. It argued that it held an ownership interest similar to a lien in the antitrust claims and their future proceeds. If accepted, this interpretation would have moved Burford to the front of the repayment line, ahead of other major creditors.

Why the Court Rejected the Litigation Funding Claim Priority

Despite Burford’s arguments, Judge Stacey Jernigan of the U.S. Bankruptcy Court in Dallas ruled otherwise. She found that the funding agreement did not meet the legal requirements to create a lien, trust, or other secured interest. Therefore, Burford could not claim priority repayment, even though it had financed the antitrust actions.

Furthermore, the court stated that treating the funding deal as a secured interest would conflict with longstanding bankruptcy principles. These principles are designed to ensure fair and predictable treatment for creditors. Allowing a litigation funder to “leapfrog” over secured lenders, the court explained, would disrupt the balance of bankruptcy law and open the door to confusing and inconsistent financial structures.

Because of this reasoning, Burford’s stake was categorized as an unsecured claim. This outcome means that Burford must now stand in line with many other unsecured creditors whose recovery prospects depend heavily on the estate’s remaining value.

Consequences for the Litigation Funding Claim and Creditor Recovery

This ruling has substantial consequences for the litigation funding claim at the center of the dispute. First, unsecured creditors generally recover far less than secured creditors, especially in large corporate bankruptcies. Harvest Sherwood’s estate is already burdened by sizable secured loans—including debt owed to JPMorgan Chase, which holds a significant security interest. Those lenders will receive repayment long before Burford receives anything.

Second, the distributor’s most valuable remaining assets are the antitrust lawsuits themselves. Because the company no longer operates as one of the nation’s largest independent wholesale food distributors. The potential recovery from those legal claims is essential for creditor payouts. Burford once had confidence that the sizable potential value of those antitrust cases would support its investment. Now, however, the funder must rely on uncertain litigation results without the benefit of priority status.

Third, the decision could influence the broader litigation-funding industry. Funders frequently structure agreements in ways that allow them to benefit from legal recoveries without becoming direct owners of the claims. After this ruling, funders may need to revisit their contract structures to ensure clarity about whether their interests will be protected in bankruptcy. This decision signals that courts may take a strict view of what constitutes a secured interest especially when creditors seek priority repayment.

What Comes Next for the Litigation-Funding Claim and the Antitrust Cases

The future of the litigation funding claim hinges on two major developments: the progression of the antitrust lawsuits and the ongoing bankruptcy process. The price-fixing cases must continue to wind their way through federal courts. If Harvest Sherwood secures large settlements or verdicts, even unsecured creditors could receive meaningful distributions.

At the same time, Burford may consider appealing the decision or renegotiating aspects of its position in the bankruptcy. So far, Burford has not issued a public comment, leaving its next steps uncertain. Meanwhile, creditor committees and secured lenders will continue shaping the reorganized estate’s legal strategy as the bankruptcy advances.

Conclusion

The ruling against Burford’s litigation funding claim marks a significant turning point in the Harvest Sherwood bankruptcy. By classifying Burford as an unsecured creditor, the court limited the funder’s potential recovery and signaled a cautious judicial approach toward prioritizing litigation-funding agreements. As the antitrust cases progress, Burford and other creditors will closely monitor whether the lawsuits can deliver meaningful value. For now, the ruling underscores the inherent risks tied to high-stakes litigation funding—especially when bankruptcy becomes part of the equation.

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London / New York – September 9, 2025 – In a strategic move reflecting its deepening commitment to legal industry innovation, Burford Capital, a leading litigation finance company, has completed a minority investment in Kindleworth, a London-based advisory firm known for helping launch and manage law practices.

A New Chapter in Strategic Legal Investment

The investment, finalized in August, marks a pivotal development in Burford’s evolving approach: moving beyond third-party litigation funding to directly backing law firm ventures and operations.

Kindleworth, founded in 2012, has already supported the creation of more than 50 law firms, including the notable Pallas Partners, which emerged in 2022 from former Boies Schiller Flexner partners. The firm offers a range of advisory services—from finance and compliance to technology infrastructure—that assists entrepreneurial lawyers in establishing robust, efficient practices.

Strategic Alignment and Growth Opportunities

Burford’s Chief Development Officer, Travis Lenkner, described Kindleworth as “very attractive in its own right”, emphasizing that the alignment extends beyond financial gain; Kindleworth’s law firm relationships open doors for Burford to channel further investments—whether through equity, litigation finance, or other forms of strategic support.

Looking ahead, the partnership is set to fuel Kindleworth’s ambition to expand into the U.S. market, a move Burford views as an opportunity to leverage emerging regulatory structures in American legal markets.

Navigating Legal Ethics: ABS and MSOs in Focus

In the U.K., structures such as Alternative Business Structures (ABS) permit external ownership of law firms—a framework Burford has already tapped into, having previously acquired a 32% stake in U.K. litigation firm PCB Litigation in 2020.

In contrast, most U.S. states maintain prohibitions on non-lawyer ownership due to longstanding legal ethics rules. Nevertheless, innovative models are emerging. Burford is exploring entry into U.S. law firm ventures via ABS-like frameworks—particularly in Arizona and Utah, where such models are permitted—or via Management Services Organizations (MSOs), structures that separate legal practice ownership (by lawyers) from operational service ownership (by investors), thus respecting ethical boundaries while enabling capital investment.

Part of a Broader Industry Shift

Burford’s commitment to growing law firm investment is not isolated. In August, the firm expressed plans to pursue minority equity stakes in U.S. firms, positioning itself as a patient, non-private-equity investor focused on long-term partnership rather than rapid exit strategies.

With litigation costs in the U.S. reaching $529 billion in 2022 and legal services overall expanding rapidly, the industry is ripe for transformation. Burford sees this as a chance to inject fresh operational and financial muscle into law firms, while earning a stake in their future growth.

What It Means for JDJournal Readers

For readers of JDJournal, this announcement signals a fundamental shift: litigation funders are no longer just backers of claims—they are becoming partners in the business of law. Burford’s investment in Kindleworth shows how financial capital and legal expertise can be channeled into empowering law firm founders and strengthening emerging firms’ infrastructure.

By investing in a firm that serves as a launchpad for legal entrepreneurs, Burford is helping shape a new era in law firm development—one where services, technology, financing, and operational excellence are baked into the DNA of new practices from day one.

Moreover, the expansion into U.S. markets via MSOs and ABS models suggests a growing openness in legal regulation to explore outside capital and professionalization—especially among mid-tier and boutique firms striving to modernize their operations.

Looking Ahead

As Burford and Kindleworth move forward with their partnership, the industry should expect continued exploration of U.S.-focused models that respect regulatory constraints while delivering capital, technology, and governance support.

Stakeholders across the U.S. legal sector—particularly those in jurisdictions testing ownership reforms, such as Arizona, Utah, and potentially beyond—should watch closely. Burford’s strategies may pave the way for greater legal industry investment and usher in a new phase in law firm evolution: one that blends entrepreneurial agility with institutional backing.

For JDJournal, the key takeaway is clear: the legal finance landscape is broadening, and with it comes a new wave of opportunities for law firms ready to adapt and collaborate.

The post Burford Expands Legal Industry Footprint with Strategic Kindleworth Deal first appeared on JDJournal Blog.

A new player has entered the litigation finance arena. Arcadia Finance, spearheaded by three former Validity Finance professionals, announced its launch on Tuesday. The firm has secured access to over $100 million in capital aimed at funding lawsuits.

Founders and Leadership Team

The founders, David Kerstein, Ronit Cohen, and Joshua Libling, bring significant experience to the New York-based firm. They plan to invest extensively in U.S.-based commercial and patent litigation, along with U.S. and international arbitration.

Industry Trends and Challenges

According to a report from litigation finance advisory firm Westfleet Advisors, U.S. commercial litigation funders faced challenges in raising new funds last year. Broader financial market trends led institutional investors to divert their money elsewhere, causing a 14% decrease in capital committed to new deals in 2023. Despite years of growth, the industry’s total assets under management remained flat at $15.2 billion.

Market Adjustments

The number of active players in the U.S. litigation finance market dropped from 44 in 2022 to 39 in 2023. Amidst these challenges, Arcadia Finance is optimistic about its prospects. David Kerstein expressed confidence in the firm’s ability to thrive despite the tough capital-raising environment.

Investment Strategy and Goals

Arcadia anticipates its funding deals will range between $2 million and $25 million. Kerstein, who previously founded Validity and worked at Omni Bridgeway, did not disclose the firm’s investors. However, he mentioned that Arcadia is backed by multiple U.S.-based financial institutions, with commitments exceeding $100 million. At least one of these backers manages billions of dollars in assets.

Background and Departure from Validity Finance

The co-founders departed Validity Finance in August 2023 after the firm scaled back on new commercial investments. Validity had to cut staff and focus solely on patent cases following TowerBrook Capital’s decision to halt future investments, as reported by Bloomberg Law in June 2023. Validity’s founder and CEO Ralph Sutton did not comment on the matter, and a spokesperson for TowerBrook also declined to comment.

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In a significant legal battle, a Manhattan litigation boutique, Holwell Shuster & Goldberg (HSG), along with its outside funder, Bench Walk Advisors, secured a $101 million jury verdict against Walmart Inc. The verdict favored London Luxury, a textile vendor, which accused Walmart of breaching a contract to purchase over $500 million worth of Covid-era personal protective equipment.

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Legal Triumph on Home Turf

The verdict, delivered by an Arkansas jury, marked a significant win for London Luxury, especially considering it was against Walmart, on the company’s home turf. Holwell Shuster & Goldberg, known for its formidable legal prowess, represented London Luxury in the lawsuit, stepping in after the vendor parted ways with two larger firms. Bench Walk Advisors, a litigation funder, provided crucial financial backing, investing over $5.1 million in the Walmart case and other lawsuits.

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Post-Verdict Options

While Walmart is considering its post-trial options, including a potential appeal, it maintains its commitment to ethical business practices. Represented by Jones Day and other firms, Walmart expressed disagreement with the jury’s decision, citing a lack of evidence to support the verdict.

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The Legal Journey

London Luxury initially filed the suit in New York but later saw it moved to federal court in Arkansas. Following a 10-day jury trial, the verdict favored London Luxury, signaling a victory for justice.

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Legal Landscape and Strategies

Holwell Shuster & Goldberg, renowned for its strategic approach to litigation, navigated the case with partners Brendon DeMay and Priyanka Timblo serving as co-lead counsel for London Luxury. The firm’s commitment to contingency and alternative fee arrangements allows clients to manage litigation costs effectively.

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Role of Litigation Finance

The involvement of Bench Walk Advisors highlights the growing trend of litigation finance in the legal industry. With investors pooling resources into lawsuits, litigants can navigate complex legal battles with financial support, mitigating risks and enhancing access to justice.

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Conclusion

The outcome of the London Luxury v. Walmart case underscores the significance of legal strategy and financial backing in complex litigation. As the legal landscape continues to evolve, partnerships between law firms and litigation funders are poised to play a crucial role in ensuring fair and equitable outcomes in the courtroom.

The post Walmart's $101 Million Loss: A Victory for Firm and Funder first appeared on JDJournal Blog.

In the fiscal year ending June 30, 2023, investors exhibited a reluctance to pour fresh capital into lawsuits, signaling a slowdown in the litigation finance sector. According to data from litigation finance consultancy firm Westfleet Advisors, new commitments to lawsuits amounted to $2.7 billion during this period, down from $3.2 billion in the previous fiscal year. Despite this decrease, total assets under management experienced a marginal growth of less than 1%, reaching $15.2 billion.

Challenges in Capital Raising for Litigation Finance

Charles Agee, CEO of Westfleet Advisors, highlighted that lawyers encountered limitations in funding channels. He emphasized the importance for litigators to diversify their funding sources, noting, “Many litigators learned the hard way in 2023 that it makes more sense to be connected to the broader market rather than to concentrate on a relationship with a single funder.”

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Factors Contributing to the Downturn

The litigation finance industry, which allows investors to invest in legal cases in exchange for a share of potential awards, faced headwinds due to macro trends in financial markets. Amidst tight credit conditions and reduced enthusiasm for mergers, acquisitions, and initial public offerings, investors diverted their funds to safer options like money-market funds, which exceeded $6 trillion by the end of January.

Impacts on Industry Players

The decline in lawsuit investments had repercussions on litigation funders such as UK-based Augusta Ventures, which had to downsize its workforce. By late September 2023, the company’s employee count dwindled to 15 from 38 in December 2022. Additionally, some firms resorted to selling portions of their assets to navigate the challenging landscape.

Shifting Dynamics Among Major Players

Despite the overall decrease in new commitments, major US law firms intensified their involvement in litigation finance, according to Westfleet’s findings. These firms accounted for 35% of new commitments, up from 28% in the previous year, indicating a growing interest among sophisticated users and in diverse deal structures.

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Trends in Deal Structures and Case Types

Portfolio structures, where funders finance bundles of cases to mitigate risk, dominated 66% of deals. Notably, patent litigation remained the largest category of funded matters, representing 19% of commitments.

Industry Personnel Movement and Evolution

The fiscal year was characterized by a significant exodus of professionals from established funders, many of whom ventured into entrepreneurship or explored adjacent sectors like insurance. Agee remarked, “Dozens of litigation finance industry professionals made career moves in 2023, reflecting a dynamic landscape where capital sources enter and exit the market while new ventures emerge.”

Methodological Changes in Reporting

Westfleet Advisors revised its methodology for calculating assets under management, resulting in a revised figure of $15.1 billion for the previous fiscal year, up from $13.5 billion as reported in the 2022 report. This adjustment aimed to provide a more accurate depiction of undrawn capital commitments for certain industry participants.

In summary, while the litigation finance sector experienced a slowdown in investor inflow, the evolving landscape witnessed shifts in participation among major players, changes in deal structures, and a dynamic movement of industry professionals.

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A recent revelation involving Ilyas Khrapunov, a Kazakhstani individual accused of orchestrating hundreds of millions of dollars laundering from the largest city in Kazakhstan and a central bank, has sparked controversy as he aligns himself with his brother’s litigation finance startup. According to records from the Swiss business registry and a court affidavit, Ilyas Khrapunov has assumed the consultant position at Litigation Partners, SA, founded by his brother Daniel Khrapunov in February.

Shady Past and Current Endeavors

Money Laundering and Exile

Ilyas Khrapunov, previously accused by a federal judge of establishing shell companies exclusively for money laundering purposes, has now positioned himself as an external advisor to Litigation Partners. The litigation finance firm, based in Geneva, specializes in complex litigation, mainly focusing on disputes related to former Soviet Union countries.

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Litigation Partners: A Controversial Venture

The Industry Landscape

Litigation finance, a decade-old industry boasting approximately $13.5 billion in assets under management, involves investors funding lawsuits in exchange for a portion of the award if the case succeeds. Although major markets for this industry include the US, UK, and Australia, Switzerland has seen the presence of notable firms like Burford Capital and Omni Bridgeway.

Lack of Transparency and Regulation

The industry’s growth can partly be attributed to the minimal regulation and transparency surrounding funders. While some US courts have started advocating for more disclosure, Switzerland, where Litigation Partners operates, has yet to see significant regulatory pushes.

Funding Origins and Controversial Figures

Litigation Partners’ capital sources and the extent of its funding remain undisclosed in the public domain. Daniel Khrapunov claims that the startup funds were derived from a 2020 sale of Swiss-based real estate initially purchased by his mother in 2004. His parents, Viktor and Leyla Khrapunov are in exile in Switzerland after being convicted in absentia in 2018 of defrauding Almaty, Kazakhstan’s largest city, of at least $300 million.

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Past Financial Misconduct and Current Ventures

The Beverly Hills Connection

Daniel Khrapunov, now 27, and his sister Elvira Kudryashova were implicated in a California LLC named 628 Holdings, allegedly using funds looted from Almaty to purchase properties. Despite claims in a lawsuit filed by Almaty, the lawsuit was dismissed in 2018 due to jurisdictional constraints.

Denial and Educational Pursuits

In response to questions about his role in 628 Holdings, Daniel Khrapunov refuted any involvement in the alleged crimes, stating he was a full-time student in Switzerland. Meanwhile, Ilyas Khrapunov, a key player in managing family fortunes, is currently involved in a master’s law program with aspirations of becoming a litigation consultant.

Recent Legal Troubles and Financial Struggles

Judgment and Financial Strain

In July 2023, a US District Judge upheld a $200 million verdict in favor of BTA Bank against a unit of Swiss Development Group (SDG), a company set up by Ilyas Khrapunov for real estate deals in the US. Despite financial struggles, including a $221,000 judgment, Ilyas Khrapunov revealed his involvement with Litigation Partners in a court update.

Little Oversight in Switzerland

Unlike the US, where battles over disclosure are intensifying, Switzerland lacks significant regulation in the litigation finance sector. While the Swiss Federal Supreme Court deemed litigation funding permissible in 2004, provided funders act independently, there is a notable absence of strict oversight.

Industry Insider’s Perspective

Isabelle Berger, Chief Investment Officer at Nivalion, a Swiss-based entity regulated by the Swiss Financial Market Supervisory Authority, highlighted the industry’s adherence to rules. Despite the lack of strict regulations, Berger believes that the market’s size may deter new entrants.

In summary, the intertwining of Ilyas Khrapunov with his brother’s litigation finance startup raises eyebrows, especially given the family’s controversial past and ongoing legal battles. The evolving landscape of the litigation finance industry and Switzerland’s minimal regulatory environment add further complexity to this unfolding saga.

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The post A Kazakhstani Figure Accused of Money Laundering Finds New Role in Litigation Finance first appeared on JDJournal Blog.

Pretium Sets Up Legal Investment Group

Specialized investment management firm Pretium has announced the setting up of a legal opportunities investment team. The firm boasts of more than $26 billion in assets. The newly established legal opportunities team will collaborate with corporations and law firms to find and invest in opportunities in the legal and commercial sectors.

The investment management firm will be investing in high-value complex disputes between businesses, antitrust, patent and intellectual property, arbitrations, bankruptcy, distressed debts and insolvency and monetization of judgments and awards. The firm has clarified that it will not be investing in consumer litigation finance.

The newly formed team will be headed by Matthew Cantor, who currently serves as a Senior Managing Director at Pretium. Prior to joining Pretium, he has worked both as an investor and as an attorney at leading law firms. This experience includes leading the successful resolution of the Lehman Brothers estate where he devised the legal strategy for liquidation of Lehman’s assets and business after it emerged from bankruptcy. He also served as a partner in the corporate restructurings group at Kirkland & Ellis LLP. He started his career at Weil, Gotshal & Manges LLP. Cantor was also a Founding Principal at Normandy Hill Capital, an event-driven credit and special situations investment manager.

Charles (Chad) Schmerler will also be joining Pretium as Senior Managing Director and head of Litigation Finance. He previously served as the CEO of Yorkside Capital, a litigation finance firm founded by him. He was also a litigation partner at Kirkland & Ellis, where he worked for more than 14 years. He has also authored a treatise on international insolvencies and debt restructurings. He completed his JD from Boston University School of Law.

The new team will also consist of other experienced legal, financial, and investment professionals having diverse professional backgrounds. They bring subject matter expertise in litigation finance, intellectual property, legal risk monetization, forensic accounting, and damage analysis.
Speaking about the newly formed legal investment group, Cantor said, “We look forward to working with law firms, corporations, and other sophisticated parties to utilize our deep knowledge and substantial capital to provide them with bespoke financing solutions that help them efficiently and effectively manage their legal risks and pursue commercial claims that fit within our investment criteria.”

Don Mullen, Founder and CEO of Pretium said, “We are thrilled to further expand Pretium’s capabilities into this fast-growing area of the market, where we believe our combination of scale, an exceptional team, and financial sophistication meets a growing need. As many of today’s fastest growing companies and industries mature, there will be increased demand for experienced and well-resourced firms to assist them in managing their legal risks particularly in areas of intellectual property, patents and technology. With the expertise of our legal strategies team, we are excited to offer investors a diversifying investment with attractive returns that are minimally correlated to the broader economic cycle.”

Mullen previously served as the Global Head of Goldman Sach’s Credit and Mortgage business, before he founded Pretium in 2012. Currently, Pretium employs about 2,500 people across its 29 offices.

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