Something is better than nothing: Court approval of liquidator entering litigation funding agreement

This week's TGIF considers In re City Pacific Limited in which the NSW Supreme Court considered whether to approve a liquidator entering into a litigation funding agreement under which the funder would receive a premium of at least 50% of any judgment or settlement achieved.

WHAT HAPPENED?

In late 2009, two related companies were wound up and the same liquidator was appointed. The liquidator instituted two proceedings in the NSW Supreme Court:

1. against the former directors of one of the companies alleging breaches of their directors' duties; and
2. against a valuer who was said to be implicated in those alleged breaches.

The liquidator obtained approval to enter into a litigation funding agreement on behalf of the companies to permit him to run those proceedings. However, in April 2017, approximately two months before the hearing of the directors proceedings, the liquidator resigned.