How to Not Get Scammed in Litigation Finance
Welcome to the Alts Sunday Edition
I recently lost $10,000 on a bad litigation finance investment.
Not because I was reckless. The opposite, actually. It was my first ever LitFi investment, and I’d done my homework (or thought I had).
The company I (and other Altea members) invested in was called Fenchurch Legal. If the name sounds familiar it’s because we’ve worked with them in the past.
On the surface, everything checked out. They were a well-known firm, with a loan book worth £27 million. The default rate was 0%. Zero! Across hundreds of loans!
By nearly every metric, this was a business that worked. So I put $10,000 of my own money into Fenchurch SPV 4.
In April, the parent company went into administration. In a matter of weeks, the entire thing fell apart. 580+ investors (including some from our Altea community) are now at risk of losing all or most of their capital.
A few weeks later, a second LitFi situation landed on our radar. Manhattan ST Notes, a US/Singapore company I didn’t have a dollar in. Same basic pattern though: polished materials, named institutions attached to it. This time, the platform suddenly went dark. Oof.
When you lose money on an investment, you can put your tail between your legs, quietly eat the loss, and move on.
But we’re running an alternative investing and education platform here. What we actually want is to prevent people from getting into bad deals in the first place.
So instead of sulking, we did two things:
We got organized, creating recovery groups for affected investors
This issue is about the course. What it’s about, what we learned, and why we keep building courses in general, especially when they come out of a loss instead of a win.
For the roughly 1% of you who will take the whole thing, awesome — that’s exactly who it’s designed for!
For the other 99%, read on to get the five biggest takeaways, one per module, free of charge.
Let’s go
What this course is (and isn’t)
This is actually the second course we’ve ever built. The first was How to Invest in Film Bridge Lending, which got great feedback:
Building the film course taught us something: this shouldn’t be a one-off. So we’re turning it into a series. Litigation finance is chapter two.
The course is long!
Let’s get something out of the way first: The course is not a five-minute read, and we didn’t try to make it one.
This asset class has some serious structural complexity: SPVs, ringfencing, security trustees, audited accounts, insolvency procedures. Compressing all that without dumbing it down takes more than a quick checklist that you can whip up in ChatGPT.
This is real due diligence, and we worked hard to fit it into five meaningful modules.
We used real examples
Throughout, we lean heavily on real examples from both Fenchurch and Manhattan ST Notes.
I’m talking specific documents, numbers, and decisions that real people actually made. Not because we’re fixated on these two cases, but because abstract due diligence advice (“read the fine print!”) doesn’t actually teach you anything. Understanding exactly how two real investments failed does.
This is not a dig at Litigation Finance
This course is also definitely not an argument against litigation finance as an asset class.
Yes, there is some sloppiness in the industry, as well as some bad actors. But the category is sound. Institutions have been doing this profitably for decades.
What broke with Fenchurch wasn’t the strategy, it was the wrapper around it. Our course exists to show you the difference, because the difference is everything.
The course was reviewed by real community experts
Finally, and I cannot stress this enough, this course is not a bunch of AI slop taped together.
Yes, we used AI to help structure the course, sure. In that respect, it was a godsend! Pretending otherwise in 2026 would be silly.
But that’s a far cry from having AI generate the whole thing and passing it off as truth. Facts were checked, pushed back against, links were carefully chosen, and words were written by actual humans.
And best of all, we reached out to domain experts within the Altea community — real litigation finance pros and investors who live & breathe in this space.
This course is better because of the people who read drafts and pushed back.
In particular, thanks to Bryan Cooley, Rekha Holla, Travis Mitchell KC, Mandar Mirashi, and Louis Morin for substantive feedback on structure, regulatory framing, underwriting practice, and case studies.
Five takeaways
Here’s a quick rundown, fun fact, and big takeaway from each of the five modules (for the 99% of you who, let’s be honest, will never take the course).
Module 1: What Litigation Finance Actually Is
The real structural opportunity, and the spectrum of models from outcome-dependent to receivables-based
Fun fact: Even a simple lawsuit in the US costs around $20,000 once you add up legal fees, court costs, and expert witnesses. Complex cases blow past $50,000, before anyone’s won anything.
Takeaway: That cash flow problem is the entire reason litigation finance exists. And because it’s a hybrid (no collateral, no credit score impact, nothing owed if the case loses) a “0% default rate” can be technically true and still tell you almost nothing. Why? Because the platform gets to define “default.”
Module 2: The Four Pillars of Ringfencing
How an SPV really works, and what “ringfenced” really means versus what it’s made to sound like.
Fun fact: “Ringfenced” isn’t actually a legal term. It’s marketing language for something with a real name (a bankruptcy-remote SPV), and bankruptcy-remoteness has four specific legal requirements, none of which is “we promise.”
Takeaway: Most retail-marketed SPVs we looked at, Fenchurch included, were missing at least one of these four pillars.
Module 3: Five Things That Look Like Protection (But Aren’t)
Security trustees, named insurers, quarterly coupons, and spotless track records — and the specific conditions under which each one fails you.
Fun fact: When Manhattan ST Notes investors called the Singapore fund manager named in their own offering materials, the fund manager publicly disavowed any involvement and asked to have its name taken off the documents. The named insurer couldn’t even locate the policy number.
Takeaway: A security trustee, a named insurer, and a spotless track record can all be genuinely real and still not protect you. Verify every named entity directly. Don’t take the offering memo’s word for it.
Module 4: How to Perform Due Diligence on the Offering Docs
How to actually read what you’re given: the accounts, the disclosures, the regulatory framework, and the questions that separate risky platforms from sound ones.
Fun fact: One real UK litigation finance offering listed £782 million of work-in-progress against just £87 million of capital actually deployed into cases. That’s nearly a 9x gap, and almost nobody reconciled the two numbers before writing a check.
Takeaway: Read the audit opinion before the pitch deck, every single time. It tells you how much to trust everything else in the package.
Module 5: What To Do When It Goes Wrong
How administration actually works, what your options are at each stage, the coordination problem nobody warns you about, and the exact steps to take in the first 48 hours.
Fun fact: The same creditor whose surprise £4 million demand pushed Fenchurch into administration ended up buying the loan book and the SPV shares right out of administration. Meaning the guy who pulled the trigger was also the guy who acquired the wreckage!
Takeaway: Write the investment off in your head the day administration is confirmed. Anything you recover after that is a bonus, not a right. And expect recovery scammers to start circling noteholder lists within weeks.
Is this course for you?
So who should actually take this course?
Well, probably not everyone. And that’s ok!
If you’re new to litigation finance, come back to this course before you make your first investment. It’s not going anywhere.
On the other hand, if you’re actively allocating into litigation finance deals (or private credit more broadly), these five modules are absolutely worth your time. 30 minutes, start to finish. (For something this dense, that’s a steal.)
By the end, you’ll have a complete due diligence framework you can apply to any litigation finance opportunity that crosses your desk.
There’s a quiz at the end.
Estimated time to complete the course: 30 minutes.
What you get for completing
An invitation to participate in litigation finance opportunities vetted through this exact framework
Confidence in your ability to evaluate any litigation finance deal on its actual merits
+100 points in our Rewards Program
That’s it for today!
Big thanks to Bryan, Travis, Rekha, Mandar, and Louis for helping make this course shine.
This course almost certainly still has gaps. If you find one, that’s what the comment button is for.
Until next time, Stefan
Have you invested through Fenchurch? If so, we can help.
We have created a secret space to discuss the situation privately. Comment below or DM me directly to be added.
Disclosures
This issue was written and edited by Stefan von Imhof
This issue was sponsored by Shield AI. It contains no affiliate links.
Alt Assets, Inc has never invested with Fenchurch or Manhattan ST Notes. It has never had any holdings in any companies mentioned in this issue.
Stefan personally invested $10,000 into Fenchurch SPV 4.