A recent decision by the Supreme Court of Canada involving third-party litigation funding may cause a spike in the outside investment of insolvency proceedings, especially coming on top of the economic downturn caused by the COVID-19 pandemic.
Canada’s top court has given the green light to litigation funding agreements used in specific circumstances. On May 8, the Supreme Court of Canada issued a decision in which it ruled that litigation finance could be used in an insolvency proceeding. The case, 9354-9186 Québec v. Callidus Capital, opens the door to professional investment in insolvency matters, which are expected to rise in the wake of COVID-19 related financial fallouts.
