Abstract

The article discusses the growing importance of third-party litigation funding, especially in the context of entities at risk of insolvency. Third party litigation funding is still a new and relatively unknown practice in Poland, but one that may offer significant opportunities to pursue claims that previously were not brought to court due to the high costs of litigation. The author analyses how such financing can change the approach to debt recovery by transferring the costs and risks onto third parties. This enables trustees in bankruptcy and receivers to manage debtors’ assets more effectively, thus increasing the chances that the creditors will be paid and the restructured entities will be able to continue operating.
The entities in bankruptcy or under restructuring often have considerable and well-documented claims, which, however, are neglected due to the trustee’s ignorance, the high costs of pursuing claims, protraction of the liquidation of the bankruptcy estate and the risk of losing the case. The Bankruptcy Law and the Restructuring Law do not provide for barriers that could prevent the conclusion of third-party litigation funding agreements. The scope of requirements related to the conclusion of such agreements by trustees or entities under restructuring is primarily reduced to the need to obtain the consent of the judge-commissioner or the committee of creditors.