Burford Capital Share Discussion Threads

[alter ego] 21/5/2021 12:29

It's a long article so best to read it. I am a registered user but don't pay a subscription. Am able to read 4 articles per month before the shutters come down. Sign up with email and a password.

[tradertrev] 21/5/2021 12:18

Could you summarise the insights please as it's behind a paywall?

[alter ego] 21/5/2021 12:07

Bloomberg piece on the struggle to seize the Luna. Some insight into what BUR have invested and what they hope to gain.

[maddox] 20/5/2021 20:29

Hi Kirkie,

Hmmm I wouldn't be so sure about that. In most cases it's third parties that are trying to hold auditors to account - where, agreed, there is little chance of success. However, in this case, its the Liquidator who is defacto Carillion's management to whom the auditors do have a duty of responsibility. As it is they that contracted KPMG to do the work.

Litigation Finance firms don't have a track record of pursuing fruitless claims, and it'll be interesting how this pans out.

[maddox] 20/5/2021 20:17

hi tradertrev, it appears that the FT's far more concerned to slag off litigation finance than to criticise the fact that auditors can do a lousy job and usually walk away without any accountability. Really poor journalism.

[kirkie001] 20/5/2021 14:01

I don't think that the LCM funded action against KPMG has a prayer of success. The directors are liable, and stretching that to relying on the auditors approval is practically admitting that they (the directors) weren't up to the job of running the company and attempted to rely on someone else.

This is the kind of case that Burford's DD hopefully ensures doesn't even get through their own pricing committee for underwriting.

[time_traveller] 20/5/2021 13:56

Unsurprising intellectual illiteracy from the FT. There's no logic to the claim that defendants are MORE likely to obstruct and delay courts against LitFin cases, compared to self financed litigation. Moreover, I'd say stretched self financers are more likely to cave in to a settlement in the face of expensive delay tactics. And LitFin isn't in the habit of investing in flimsy cases - quite the opposite. That said, the LCM involvement with this one is surprising, on the face of it.

[tradertrev] 20/5/2021 12:36

I hope Burford acquired the Akhmedov film rights as part of the deal with his Mrs.

[tradertrev] 20/5/2021 12:17

More claptrap and a (-n excuse for a) dig from the FT today - in particular they see litigation funding as likely to encourage the pursuit of more flimsy cases and the defendants to string things out for longer so as encourage plaintiffs to accept a settlement, when in reality the opposite is true:

"The Royal Liverpool Hospital was due to open in March 2017. More than four years later it remains a building site and a memorial for its original builder, Carillion.

Just as delayed and fraught have been attempts to hold to account those responsible for the collapse of the construction outsourcer into insolvency in 2018. This week the calls for retribution were directed at KPMG, the auditor that signed off Carillion’s accounts for 19 years.

Liquidators have secured backing to pursue KPMG through the High Court on an allegation of negligence, with funds provided by no-win-no-fee specialist Litigation Capital Management. The use of private litigation financing is unusual for what is effectively a test case.

Though there have been attempts in the past to hold company auditors accountable for losses, the action against KPMG is believed to be the first involving a compulsory bankruptcy handled by a court-assigned civil servant known as the official receiver. Also unusual is the involvement of PwC, which is earning about £50m to run the liquidation on behalf of the Insolvency Service. In effect this is one of the big-four accountants steering a lawsuit against another.

This creep of private investor money will not sit well with those who see litigation funding as a taint on the judicial process. Broad claims of Americanisation have followed criticism of sector heavyweight Burford Capital over its policy of part-booking case values before judgments were delivered.

Though a 2006 High Court ruling allowed external backers into the English legal system, third-party funding is still a relative rarity. The ever-growing pile of investor cash waiting to be deployed raises the likelihood of flimsier actions, however, and regulation for the moment is by a voluntary code of conduct. Introducing a pure profit motive might encourage defendants to waste court time with delaying tactics that erode the financial backer’s risk-reward estimates and make a settlement more palatable.

Litigation funders scored a rare PR victory last month when the High Court quashed criminal convictions against 39 Post Office staff bankrolled by Therium Capital Management who had spent more than a decade seeking to clear their names.

The case against KPMG does not look so clear cut. Central is the official receiver’s view that Carillion’s board of directors considered the business “profitable and sustainable” because of a clean audit. Its argument appears to hang on the conceit that the outsourcer’s directors took KPMG’s opinion as a reason to keep dividends and bonuses flowing for longer than they should. Because the auditor failed to flag to the board the company’s own misreporting of contract liabilities and burying of debt through Greensill-style supply-chain financing, it might have to wear the responsibility.

In 2018 a parliamentary inquiry found KPMG “complicitR21; in Carillion’s aggressive accounting policies because it had failed to challenge management. Complicit does not mean accountable, however. Did the outsourcer’s board really rely on the auditor to understand its own financial reports? Even the most skilled of outsourcers would struggle to pass that buck.

The case of Equitable Life offers a precedent of sorts. In 2005, five years after its near collapse, the mutual insurer abandoned a negligence claim against its auditor Ernst & Young for £700m in damages. Capitulation came only after Equitable’s former directors told the court that EY’s opinion had not affected how they ran the company, which made it difficult to prove the necessary condition that any negligence had caused loss.

Though it’s a fool’s errand to defend KPMG’s role in the Carillion scandal, allegations of negligence look driven more by the legal system’s favourite tenet of following the money than by a desire to hold wrongdoing to account. Third-party funding makes transparent the profit motive.

KPMG is flush, having sold its UK restructuring business in March to private equity firm HIG Capital for £400m, and should have professional indemnity insurance in place to backstop liabilities. Settling quietly to avoid the multiyear court case might be in both its interest and those of Litigation Capital Management, which has reported a case success rate of 95 per cent.

Meanwhile, much like the Royal Liverpool Hospital, the construction of a case for Carillion’s board of directors to answer remains as frustratingly far from completion as ever."

Personally I think Litigation Capital will lose their shirts on this case - I seem to recall that there is legal precendent in this country that auditors don't have a duty of care to anyone!

[chester9] 20/5/2021 11:09

Now according to the comic called the Daily Mail a boat full of Russian ex SBS versus Uk SBS is about to kick off in Dubai. This has not happened yet so not exactly a tactical surprise attack.Burford will not get into a major international shootout incident in another Country. They abide by the law, if they did not, its game over as a company.They have the law their brains, patience and style. The Daily Mail have been watching too many Bond films, though it makes for fun headlines. At the end though this divorce will make a good film. I'll be expecting that.

[lazg] 19/5/2021 20:02

Maybe someone could ask IR

[rar100] 19/5/2021 19:59

Tradertrev,

Yes I'm with you re: the AGM, particularly as we have just had a dramatic rise in share price and now a fairly dramatic dip. No news at all is uncomfortable and negligent really imho. It's like they are missing a trick, shareholders have had a very awful ride over 2 to 3 years so silence when there shouldn't be is irritating to say the least.

[butchdriveshaft] 19/5/2021 16:59

Tatiana Akhmedova has apparently won a judgement in the Marshall Islands (country where Luna Yacht is flagged) and had the yacht transferred into her name. Former SBS officers have been hired to storm and take control of the boat(!)

I wouldn’t normally treat the Daily Mail as a reliable source but appears to be legitimate as they have sourced quotes confirming from both parties:

[tradertrev] 19/5/2021 12:36

Strange that we haven't had any statement on the AGM yesterday, even if only to give the results of all the resolutions.

[1aconic] 19/5/2021 11:12

Yeah, I wonder if there are more angles as the original BUR press release says it will be financing claims brought in London and this was in Germany. The case in the link I posted was specifically DAF and there are of course multiple truck manufacturers involved. The ruling in Munich doesn't seem to deny the validity of the claim, just that it shouldn't be brought as a class action with litigation funding. One to keep an eye on as the sums involved are meaningful.

[galatea99] 18/5/2021 21:36

"Pour financer son action, le cabinet a levé des dizaines de millions d’euros auprès d’un fonds, Burford Capital"

So Burford are said to have agreed to finance Hausfeld to the tune of "tens of millions of euros" in these truck cartel cases.

Of course the EU have already fined the members of the cartel €3.8bn four years ago so the evidence against the cartel must be pretty solid.

[1aconic] 18/5/2021 18:50

It was 2017 vintage. Unfortunately looks like it (or a part of it at least) hit a stumbling block in the German courts in Nov 2020: hxxps://www.noerr.com/en/newsroom/news/noerr-fends-off-eur-600-million-antitrust-damages-lawsuit-for-daf

[1aconic] 18/5/2021 18:37

Interesting that's still live - good spot. Rings a bell from a few years ago. Hopefully the marathon is half run now

[galatea99] 18/5/2021 17:37

There's an article here in Ouest-France concernant the truck cartel case wending its way through a number of European jurisdictions. Burford is mentioned as having put up funds to support the US firm Hausfeld in their particular case. However, the article is really pointing out a small step on the way in the case ongoing in Amsterdam, not the one Burford are involved in. The Dutch court seems to have rejected the cartel's plea that they had caused no harm to purchasers of their trucks.



No doubt there will be many such small steps in these cases. Indeed, the newspaper refers to it being a "legal marathon".

Encouraging all the same since I suppose the cartel will be putting up similar defences in all the legal jurisdictions where cases are being pursued.

Petit pas par petit pas et on arrivera au bon port!

[lomax99] 17/5/2021 18:40

It's a legal requirement.

[rar100] 17/5/2021 18:08

I hope there is some (good) news from the AGM, seems a kind of pointless exercise if not.

[stentorian] 17/5/2021 17:14

BUR ex-div on Thursday. 27 June payable on 18 June.

12.5c a share

[lomax99] 17/5/2021 09:47

BUR AGM tomorrow, not expecting any further news/update to come out of it.