Katch shuts litigation fund after motor finance delays create severe liquidity pressure
One of the most prominent litigation funders in the consumer claims market has placed its flagship vehicle into liquidation after prolonged delays in motor finance cases created severe liquidity pressures. Katch Fund Solutions, headquartered in Luxembourg, told investors that its litigation fund would begin a formal wind-down from the start of September following a sustained period of financial strain.
Katch has been deeply embedded in consumer litigation for several years and has financed work across the sector at a significant scale. It was among the largest funders of SSB Law before the firm collapsed at the beginning of 2024. At that time, Katch was owed sixty-three million pounds, including sixteen million pounds in interest, and held three debentures over the firm. It had also backed motor finance claims at McDermott Smith, which entered insolvency six months later owing the funder seven million pounds.
The funder continues to support a very substantial Plevin claim valued at an estimated eighteen billion pounds. The case concerns undisclosed commission payments attached to payment protection insurance. However, the litigation suffered a setback earlier this year when the court declined to grant a group litigation order. Katch has committed a litigation budget of more than ten million pounds to the action and has provided an indemnity of the same amount for adverse costs.
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In a letter sent to investors in August and seen by Legal Futures, Katch director Laurent Jeanmart said the board had concluded that liquidation was the most responsible option. He cited the prolonged resolution of personal contract purchase claims as the core reason for the decision. The fund had expected settlements during 2025, but a Supreme Court ruling delivered last August and subsequent announcements from the Financial Conduct Authority pushed the likely date of the first resolutions into 2026 with no certainty over timing.
The company said that these delays had created a severe liquidity mismatch, particularly as redemption requests were rising and no short term cash events were available. The board therefore opted for a structured liquidation to ensure that remaining capital could be returned fairly and on a pro rata basis.
The value of the fund in June 2025 was recorded at four hundred and twenty-two million pounds. Nearly half of this relates to motor finance claims, with forty-six million pounds attributed to litigated cases and one hundred and sixty million pounds tied to non-litigated claims. Plevin claims accounted for sixty-three million pounds and cases involving mortgage prisoners made up a further sixty-two million pounds. The fund had also lent an unnamed law firm forty-three million pounds in working capital.
A subsequent update in October revealed that the fund had reduced its valuation to three hundred and fifty eight million pounds. The adjustment followed the Financial Conduct Authority plan for motor finance claims. Katch recalculated expected average damages at eleven hundred pounds, down from the earlier forecast of one thousand nine hundred and seventy-three pounds, and removed around five percent of claims from the portfolio after identifying ineligible cases.
Katch has now shifted its focus to commercial litigation funding and is building its Legal Lending Fund, which targets significantly higher returns