Northleaf gives litigation funder just 13 more days as debt interest stays elevated

Litigation Capital Management has secured another short extension of a debt covenant waiver from Northleaf Capital Partners, giving the specialist dispute financier until 13 November to complete the remaining conditions of a longer-term funding restructuring.

The AIM-listed company said on Monday that a waiver previously due to expire on 31 October had been extended for a further 13 days. During that period, interest on the loan will continue to run at an additional two percentage points a year.

Northleaf has not imposed another one-off fee for the extension.

The announcement follows an agreement reached in September to restructure the company’s borrowing arrangements as it winds down its existing litigation-finance portfolio.

Under that longer-term amendment, the facility limit would rise from US$100m to US$125m, its maturity would move to 31 December 2030, and existing financial covenants would be replaced with conditions more closely aligned with the collection of proceeds from outstanding cases.

The amended terms would also allow interest to be capitalised rather than paid immediately in cash, reducing near-term cash demands. However, the changes remain dependent on the satisfaction of outstanding conditions.

Litigation Capital Management said the unusually short waiver extension reflected progress towards completing those requirements. It did not disclose precisely which conditions remained outstanding.

The financing negotiations follow a difficult financial year in which the company recorded substantial losses on concluded litigation investments and reported net liabilities.

Its strategic review ended without a transaction, and management has adopted an orderly run-off strategy. Rather than committing capital to new cases, the business intends to manage its existing portfolio through to resolution, with cash realisations directed first towards repayment of debt.

That makes the timing of legal settlements and recoveries particularly important. Litigation-finance assets can take years to generate cash, while borrowing costs and covenant requirements continue throughout that period.

The continued two-percentage-point interest increase illustrates the price of maintaining lender support while the longer-term restructuring remains incomplete.

The immediate extension removes the 31 October waiver deadline, but it does not yet establish that the revised US$125m facility is fully operative. The next financing milestone is therefore 13 November, when the temporary protection is scheduled to expire.