Ch. 7 debtor can’t block novel litigation funding deal, says appeals court

A U.S. appeals court last week shut down a Chapter 7 debtor’s challenge to a litigation funding agreement between his trustee and a creditor, finding that the agreement had no financial impact on William Berry Dean III, the debtor. The dispute stems from Dean’s 2019 Chapter 7 bankruptcy in Texas, where the trustee assigned to Dean’s estate struck a deal with one of Dean’s creditors, Reticulum Management LLC, to fund litigation aimed at collecting money that could be used to pay off Dean’s debts. Reticulum agreed to put forward $200,000 in exchange for 30% of any litigation proceeds the trustee managed to collect.