A Canadian Lens on Third Party Litigation Funding in the American Bankruptcy Context

This Article offers two major recommendations to expand the use of third party litigation funding (“TPLF”) into the U.S. insolvency context. As seen in the Canadian context, courts have accepted the use of litigation funding agreements fitting within certain parameters. If U.S. courts follow suit, friction against the implementation of TPLF can be mitigated. Alternatively, regulation may occur through legislative and regulatory models to govern and set out precisely what types of arrangements are permitted.

Involving entities such as the SEC may expedite the acceptance of TPLF, but special attention is necessary not to intermingle notions of fiduciaries into the discussion of TPLF, as there are contentious definitional elements present. Ultimately, a framework wherein regulation coupled with judicial oversight presents the best opportunity for the United States to adopt TPLF in the insolvency context to ensure maximum delivery of benefits to vulnerable parties.