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Escrow Release
Providing Risk Transfer for Known, Threatened or Existing Litigation
Description
Portfolio Escrow Release provides PE firms and companies with the ability to successfully ring-fence litigation exposure and transfer the full financial risk of known, threatened or pending liabilities. With Portfolio Escrow Release, the insurance carrier assumes the financial risks and liabilities for the portfolio company in exchange for a known, fixed cost. With full risk transfer of the litigation and indemnity exposures, the PE firm can: 1) distribute remaining funds in the portfolio; 2) stop ongoing legal, accounting, and compliance expenses in maintaining the fund; 3) calculate the fund’s IRR for purposes of incentive fees and track record; and 4) eliminate the uncertain financial and outcome risks of ongoing liabilities like litigation, tax or specific indemnities.
Stage of Litigation
Portfolio Escrow Release can cover litigation exposure at any stage of the litigation process.
How It Works
Each policy is customized to meet the firm’s specific business, financial and legal objectives. In exchange for the insurance premium, the insurance carrier will:
- For litigation: take over the defense of the litigation.
- Take financial responsibility for defense costs: and cover any adverse judgement.
- Take financial responsibility for any other indemnities covered by the escrow including tax exposure.
Key Benefits
- Provides risk transfer for known, threatened, or pending litigation, specified indemnities and liabilities backed by an escrow in exchange for a fixed premium.
- Covers the financial risk of litigation, defense costs, and adverse judgment.
- Enables distribution of remaining cash to GPs and LPs by ring-fencing known litigation and liabilities.
- Risk analysis provided at no cost or obligation.
- Achieves financial certainty so the company can wrap up the portfolio and distribute all remaining funds as the litigation and indemnity risks have been fully contained.
Next Steps
To arrange a confidential consultation or discuss your specific needs, please email us, call us at (214) 570-3661 or fill out the form below. We look forward to helping you solve any financial or legal uncertainty caused by any known, threatened or existing litigation.
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