UK Legal Funder Faces Setback from Car Finance Saga While Seeking New Investment

A UK litigation funder is seeking fresh capital less than six months after liquidating a key fund, marking another twist in a tumultuous year for the firm.

Katch Investment Group is in the process of raising new funds for its open-ended Katch Legal Lending Fund, aiming for a 20% annual return, as detailed in a pitch deck reviewed by Bloomberg News. The proceeds from this fund will be allocated to finance litigation, including a significant £250 million ($341 million) lawsuit against Uber Technologies Inc., representing thousands of London’s black-cab drivers.

In the expanding realm of litigation funding, investors cover the legal expenses of lawsuits in exchange for a share of any settlements, effectively betting on the outcomes of these cases.

This new fundraising initiative comes as Katch is winding down KLIF, a separate £422 million fund that supported claims from UK consumers involved in a protracted car finance mis-selling scandal. Katch had to write down the fund’s value when it became evident that the payouts would be considerably lower than anticipated, leading to a halt in redemptions in September, as indicated in letters sent to investors.

Last year, lenders were instructed by the UK’s Financial Conduct Authority to pay £8.2 billion in compensation—far less than the £30 billion initially projected.

The KLIF fund has not attracted new investors for nearly a year and is currently undergoing a voluntary self-liquidation process. A spokesperson for Katch clarified that this does not imply that the underlying investments are being liquidated, and the firm is committed to fulfilling any outstanding obligations.

Investors in the Katch Legal Lending Fund are engaging with a completely different vehicle, according to the spokesperson.

Binary Outcomes

Litigation finance firms argue that the industry empowers individuals to pursue lawsuits against large corporations, while investors are drawn by the potential for substantial returns that are not tied to other asset classes. However, these investments carry significant risks, often hinging on binary outcomes, with cases sometimes extending over several years.

For Katch, the liquidation of the fund is just one of several recent hurdles. The firm was involved in funding Sheffield-based SSB Law and Liverpool-based McDermott Smith Law, both of which entered administration in 2024.

The motor-finance saga continues to unfold. The FCA is currently investigating the Katch-backed claims management firm, The Claims Protection Agency Limited, regarding its advertising and sales practices. No conclusions have been reached by the FCA as of yet.

The TCPA has not responded to requests for comment.

“The litigation finance industry has always been about managing complex risks, and experienced investors understand this,” stated Nick Rowles-Davies, CEO of legal finance platform Lexolent. “Those investing in a new Katch fund would likely do so based on thorough due diligence, not naivety.”

Katch’s new fundraising effort reflects the ongoing tension between risks and opportunities in the industry, particularly following a challenging year for many firms, characterized by delayed payouts in significant cases and an unpredictable regulatory environment.

Unlike mainstream funders that typically support high-stakes commercial disputes, Katch has historically focused on lending to UK law firms handling large volumes of consumer claims. Following the motor finance ruling, the firm has shifted its strategy, informing investors that it will now concentrate on financing portfolios of commercial claims.

Commercial Claims

Even commercial claims, however, come with substantial risks. For instance, Burford Capital Ltd. achieved a court victory in 2023 concerning the nationalization of Argentine oil company YPF SA, positioning it for a $16 billion settlement. Yet, payment has since been delayed in US courts, leading to a 36% drop in the company’s shares during London trading last year.

Another notable case is that of Pogust Goodhead, a London-based firm backed by Gramercy Funds Management, which funded claims against BHP Group Ltd. related to a 2015 Brazilian dam disaster. Although a judge ruled against BHP last year, a decision on compensation is still pending. Meanwhile, Pogust Goodhead has incurred losses of nearly £400 million over two years.

Read more: BHP Refused Permission to Appeal UK Judgment Over 2015 Brazil Dam Collapse

Despite these challenges, the litigation funding industry appears to be on an upward trajectory, with the current $17.5 billion global market projected to exceed $67 billion by 2037, according to an estimate from legal research company Chambers and Partners cited in Katch’s pitch deck.

Some investors view the potential rewards as justifying the risks involved. Entrepreneur Invest, a French asset manager also promoting Katch’s new fund, identifies legal funding, particularly in the UK, as an appealing opportunity. Katch has been recognized as one of the leading and most established players in the sector, according to a spokesperson for EI.

Photograph: The skyline of the City of London. Photo credit: Jose Sarmento Matos/Bloomberg

Copyright 2026 Bloomberg.

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A UK litigation funder is seeking fresh capital less than six months after liquidating a key fund, marking another twist in a tumultuous year for the firm.

Katch Investment Group is in the process of raising new funds for its open-ended Katch Legal Lending Fund, aiming for a 20% annual return, as detailed in a pitch deck reviewed by Bloomberg News. The proceeds from this fund will be allocated to finance litigation, including a significant £250 million ($341 million) lawsuit against Uber Technologies Inc., representing thousands of London’s black-cab drivers.

In the expanding realm of litigation funding, investors cover the legal expenses of lawsuits in exchange for a share of any settlements, effectively betting on the outcomes of these cases.

This new fundraising initiative comes as Katch is winding down KLIF, a separate £422 million fund that supported claims from UK consumers involved in a protracted car finance mis-selling scandal. Katch had to write down the fund’s value when it became evident that the payouts would be considerably lower than anticipated, leading to a halt in redemptions in September, as indicated in letters sent to investors.

Last year, lenders were instructed by the UK’s Financial Conduct Authority to pay £8.2 billion in compensation—far less than the £30 billion initially projected.

The KLIF fund has not attracted new investors for nearly a year and is currently undergoing a voluntary self-liquidation process. A spokesperson for Katch clarified that this does not imply that the underlying investments are being liquidated, and the firm is committed to fulfilling any outstanding obligations.

Investors in the Katch Legal Lending Fund are engaging with a completely different vehicle, according to the spokesperson.

Binary Outcomes

Litigation finance firms argue that the industry empowers individuals to pursue lawsuits against large corporations, while investors are drawn by the potential for substantial returns that are not tied to other asset classes. However, these investments carry significant risks, often hinging on binary outcomes, with cases sometimes extending over several years.

For Katch, the liquidation of the fund is just one of several recent hurdles. The firm was involved in funding Sheffield-based SSB Law and Liverpool-based McDermott Smith Law, both of which entered administration in 2024.

The motor-finance saga continues to unfold. The FCA is currently investigating the Katch-backed claims management firm, The Claims Protection Agency Limited, regarding its advertising and sales practices. No conclusions have been reached by the FCA as of yet.

The TCPA has not responded to requests for comment.

“The litigation finance industry has always been about managing complex risks, and experienced investors understand this,” stated Nick Rowles-Davies, CEO of legal finance platform Lexolent. “Those investing in a new Katch fund would likely do so based on thorough due diligence, not naivety.”

Katch’s new fundraising effort reflects the ongoing tension between risks and opportunities in the industry, particularly following a challenging year for many firms, characterized by delayed payouts in significant cases and an unpredictable regulatory environment.

Unlike mainstream funders that typically support high-stakes commercial disputes, Katch has historically focused on lending to UK law firms handling large volumes of consumer claims. Following the motor finance ruling, the firm has shifted its strategy, informing investors that it will now concentrate on financing portfolios of commercial claims.

Commercial Claims

Even commercial claims, however, come with substantial risks. For instance, Burford Capital Ltd. achieved a court victory in 2023 concerning the nationalization of Argentine oil company YPF SA, positioning it for a $16 billion settlement. Yet, payment has since been delayed in US courts, leading to a 36% drop in the company’s shares during London trading last year.

Another notable case is that of Pogust Goodhead, a London-based firm backed by Gramercy Funds Management, which funded claims against BHP Group Ltd. related to a 2015 Brazilian dam disaster. Although a judge ruled against BHP last year, a decision on compensation is still pending. Meanwhile, Pogust Goodhead has incurred losses of nearly £400 million over two years.

Read more: BHP Refused Permission to Appeal UK Judgment Over 2015 Brazil Dam Collapse

Despite these challenges, the litigation funding industry appears to be on an upward trajectory, with the current $17.5 billion global market projected to exceed $67 billion by 2037, according to an estimate from legal research company Chambers and Partners cited in Katch’s pitch deck.

Some investors view the potential rewards as justifying the risks involved. Entrepreneur Invest, a French asset manager also promoting Katch’s new fund, identifies legal funding, particularly in the UK, as an appealing opportunity. Katch has been recognized as one of the leading and most established players in the sector, according to a spokesperson for EI.

Photograph: The skyline of the City of London. Photo credit: Jose Sarmento Matos/Bloomberg

Copyright 2026 Bloomberg.

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