Last updated on September 23, 2020
JSS Baristers took a look at the Supreme Court of Canada’s unanimous decision, rendered earlier this year, in the insolvency case of 9354-9186 Quebec Inc. v. Callidus Capital Corp. 220 SCC 10 (“Bluberi”) in the context of litigation financing.
The author notes that this decision is the first time that the SCC has considered litigation financing in any context. Bluberi is viewed as a confirmation by the Court that litigation financing may offer a viable path by which to maximize recovery for an insolvent company’s creditors.
“Knowing the highest Canadian Court has favourably commented upon litigation funding may be especially welcome news to insolvent companies in this heavily COVID pandemic-shocked economic environment. For solvent companies, Bluberi might be seen to open up possibilities to use third party litigation funding as a financing tool for off-balance sheet financing, as well as to free up cash flow, obtain working capital, and monetize litigation assets. Additionally, litigation funding could be beneficial to individuals with significant corporate oppression, directors and officers’ liability, and other claims.”
This Faskens’ article on Bluberi took things a step further in concluding that:
“The SCC’s guidance in this matter will no doubt have an impact on the emerging trend of litigation funding as a useful tool to realize claims and to secure the “pot of gold” that would have otherwise been too costly for a distressed debtor to pursue with its own limited resources. The SCC ruling may also be viewed by many as a blanket approval of the developing practice of litigation funding in Canada, including in the context of class action proceedings.”