In what may be the first public auction of a litigation claim to a third-party funder, Gerchen Keller Capital LLC has paid $26.2 million to the estate of a bankrupt Utah magnesium company for a stake in a judgment that the bankruptcy trustee won at trial last year. If the bet pays off, the funder could collect up to $50 million.
The bankruptcy trustee for Magnesium Corp. of America, or MagCorp., won the $213 million fraudulent conveyance judgment in February 2015 against its former owner, Ira Rennert, and his investment fund Renco Group Inc. Rennert was found liable for siphoning off too much money from the company, using proceeds to build a 29-room mansion in the Hamptons, among other things.
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