A significant litigation funding claim made by Burford Capital
suffered a major setback after a U.S. bankruptcy judge determined that the company is not entitled to secured creditor status. This ruling affects Burford’s attempt to recover a $35 million investment connected to ongoing antitrust lawsuits involving the bankrupt food distributor Harvest Sherwood. Although the funder sought priority repayment, the court concluded that the agreement did not create the secured protections Burford had argued for. As a result, the company now faces a more uncertain and risk-filled path to recovery.
How the Litigation Funding Claim Developed
To understand the weight of the ruling, it is essential to look at how this
litigation funding claim emerged. Burford Capital, one of the world’s largest litigation funders, agreed in 2022 to finance antitrust claims brought by Harvest Sherwood. Those claims targeted major meat industry producers accused of conspiring to inflate prices for chicken, pork, and beef products. Allegations that have fueled numerous lawsuits nationwide.
The funding deal provided Harvest Sherwood with the financial backing needed to pursue an estimated $1.1 billion in potential damages. In return, Burford expected repayment from any settlement or judgment, plus a return on its investment. However, the distributor’s financial situation worsened, and by May 2025, Harvest Sherwood filed for Chapter 11 bankruptcy protection. That filing
reshaped the legal landscape for every creditor involved, including Burford.
Soon after the bankruptcy began, Burford asserted that its 2022 agreement functioned as a secured loan. It argued that it held an ownership interest similar to a lien in the antitrust claims and their future proceeds. If accepted, this interpretation would have moved Burford to the front of the repayment line, ahead of other major creditors.
Why the Court Rejected the Litigation Funding Claim Priority
Despite Burford’s arguments, Judge Stacey Jernigan of the U.S. Bankruptcy Court in Dallas ruled otherwise. She found that the funding agreement did not meet the legal requirements to create a lien, trust, or other secured interest. Therefore, Burford could not claim priority repayment, even though it had financed the antitrust actions.
Furthermore, the court stated that treating the funding deal as a secured interest would conflict with longstanding bankruptcy principles. These principles are designed to ensure fair and predictable treatment for creditors. Allowing a litigation funder to “leapfrog” over secured lenders, the court explained, would disrupt the balance of bankruptcy law and open the door to confusing and inconsistent financial structures.
Because of this reasoning, Burford’s stake was categorized as an unsecured claim. This outcome means that Burford must now stand in line with many other unsecured creditors whose recovery prospects depend heavily on the estate’s remaining value.
Consequences for the Litigation Funding Claim and Creditor Recovery
This ruling has substantial consequences for the litigation funding claim at the center of the dispute. First, unsecured creditors generally recover far less than secured creditors, especially in large corporate bankruptcies. Harvest Sherwood’s estate is already burdened by sizable secured loans—including debt owed to JPMorgan Chase, which holds a significant security interest. Those lenders will receive repayment long before Burford receives anything.
Second, the distributor’s most valuable remaining assets are the antitrust lawsuits themselves. Because the company no longer operates as one of the nation’s largest independent wholesale food distributors. The potential recovery from those
legal claims is essential for creditor payouts. Burford once had confidence that the sizable potential value of those antitrust cases would support its investment. Now, however, the funder must rely on uncertain litigation results without the benefit of priority status.
Third, the decision could influence the broader litigation-funding industry. Funders frequently structure agreements in ways that allow them to benefit from legal recoveries without becoming direct owners of the claims. After this ruling, funders may need to revisit their contract structures to ensure clarity about whether their interests will be protected in bankruptcy. This decision signals that courts may take a strict view of what constitutes a secured interest especially when creditors seek priority repayment.
What Comes Next for the Litigation-Funding Claim and the Antitrust Cases
The future of the litigation funding claim hinges on two major developments: the progression of the antitrust lawsuits and the ongoing bankruptcy process. The price-fixing cases must continue to wind their way through federal courts. If Harvest Sherwood secures large settlements or verdicts, even unsecured creditors could receive meaningful distributions.
At the same time, Burford may consider appealing the decision or renegotiating aspects of its position in the bankruptcy. So far, Burford has not issued a public comment, leaving its next steps uncertain. Meanwhile, creditor committees and secured lenders will continue shaping the reorganized estate’s legal strategy as the bankruptcy advances.
Conclusion
The ruling against Burford’s litigation funding claim marks a significant turning point in the Harvest Sherwood bankruptcy. By classifying Burford as an unsecured creditor, the court limited the funder’s potential recovery and signaled a cautious judicial approach toward prioritizing litigation-funding agreements. As the antitrust cases progress, Burford and other creditors will closely monitor whether the lawsuits can deliver meaningful value. For now, the ruling underscores the inherent risks tied to high-stakes litigation funding—especially when bankruptcy becomes part of the equation.
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Litigation Funding Claim Faces Setback first appeared on
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