KBRA Releases Research – Potential OBBBA Implications for Litigation Finance ABS
KBRA releases research examining the potential implications for litigation finance ABS stemming from proposed measures under the Tackling Predatory Litigation Funding Act (TPLFA), which is currently included in the U.S. Senate’s One Big Beautiful Bill Act (OBBBA).
Litigation finance has a long history and, in recent years, has established itself as a niche segment in the asset-backed securities (ABS) market. However, the TPLFA could significantly alter the economics of this evolving structured finance asset class, as it proposes substantial new taxes on profits from third-party litigation funding. Litigation finance ABS transactions, which are typically backed by nonrecourse advances to plaintiffs in personal injury and other civil cases, could face meaningful structural and liquidity challenges if the legislation is enacted.
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About KBRA
KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.
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