02 April 2020

Burford Capital predicts significant increase in big ticket disputes in wake of Covid-19

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London's High Court: Burford Capital has praised valiant efforts to keep courts open

AIM-listed litigation funder says aftermath to pandemic will mirror that of financial crisis, generating opportunities

Litigation funder Burford Capital has predicted a significant increase in big ticket litigation and arbitration as a result of the Covid-19 pandemic and lauded the efforts of courts to keep operating during the crisis.

In a lengthy update to investors today, the AIM-listed funder recognised the ‘valiant’ attempts of courts to remain open as it predicted some inevitable short-term disruption to business counterbalanced by “potentially significant levels of new opportunities for Burford especially given corporate liquidity constraints”.

The litigation funder, which earlier this month delayed the release of its fiscal year 2019 financial results due to disruption caused by Covid-19, reassured investors that its financial statements were expected to be in-line with its 3 February trading update.

It added that its liquidity was ‘more than sufficient’ for its needs although it would not be recommending a final 2019 dividend in order to ‘husband liquidity’ so that it was in a good position to exploit the opportunities generated by crisis.

“We are cognisant that the COVID-19 pandemic is greatly disrupting the global economy as well as people's lives and remain sensitive to that fact,”  it said.

“Nonetheless, looking out at the longer-term, just as the global financial crisis of 2008-09 was followed by a large amount of litigation, Burford expects that the current global crisis and what is likely to be a time of economic pressure will result in a significant increase in the volume of large dollar litigation and arbitration matters in which Burford specialises and a corresponding increase in demand for Burford's services.”

In an update on court operations it said courts including arbitral tribunals were open to receive new filings and continuing to hold hearings and non-jury trials and issue decisions.

However, pre-trial discovery that required travel or in-person attendance, such as witness despositions, was being postponed.

Burford chief executive Christopher Bogart said:  " All of us are having to adjust to a new reality with COVID-19, just as the courts are, and while near-term delays will certainly occur in our business as well as in our financial reporting, we have a great deal of optimism about what the future holds as businesses face an environment that is both dispute-heavy and liquidity-constrained."

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