Judgement was given by the Court of Appeal on 9 May 2022 in Lock v Stanley.

The Court of Appeal agreed with the first decision of HHJ Halliwell and refused to set aside the assignment of a claim to a litigation funder.

The director, who was a creditor, challenged the assignment as the director had expressed an interest in purchasing the claim, however, did not submit an offer for the right of action.

The Judge concluded that the director’s interests did not align with the interests of the general body of creditors and concluded that the director had no standing to challenge the assignment. 

Directors beware – the use of litigation funders to pursue claims against third parties including directors is a growth area for Insolvency Practitioners (“IPs”). The litigation funders cover the costs and any adverse costs relating to the claim and allow IPs to bring claims against directors which they have previously been unable to fund.