NAV Lending Against Legal Assets: Liquidity From a Seasoned Portfolio

How litigation funds borrow against the net asset value of a seasoned case portfolio.

Net asset value lending allows a litigation finance fund to borrow against the marked value of its existing case portfolio. Unlike a warehouse facility, which finances new origination, a NAV facility extracts liquidity from a seasoned book of investments already made. This is particularly useful for funds in the harvest phase of a portfolio's lifecycle, where capital is deployed but not yet returning, and the fund needs liquidity to make new investments or to return capital to limited partners ahead of case resolutions.

The mechanics depend on valuing the portfolio. Each position is assessed for expected recovery, adjusted for probability of success, expected duration, and collectability risk, producing a probability-weighted value. These position-level values aggregate to a portfolio net asset value, against which the lender extends a facility at a conservative loan-to-value ratio. Haircuts account for valuation uncertainty, legal risk, and concentration, ensuring the loan remains well covered even if some positions underperform.

Portfolio maturity drives candidacy. NAV lending works best for funds with a seasoned book, generally two or more years of investments, that is adequately diversified, with no single case dominating the portfolio. Funds weighted toward late-stage matters, those near trial, in settlement discussions, or in judgment collection, are the strongest candidates because their expected recovery distributions are tighter and more reliable. First-vintage funds dominated by early-stage cases are harder to underwrite for NAV purposes.

The structure is typically non-recourse to the fund's limited partners. The loan is made to the fund vehicle and secured by the portfolio assets, so if the portfolio underperforms, the lender's recourse is to those assets rather than to the LPs directly. This feature matters greatly to institutional LPs who cannot accept personal liability. Any guarantee obligations sit at the general partner level and are negotiated at closing, but LP-level recourse is not standard practice.

Criterica Capital provides NAV lending against seasoned litigation portfolios, valuing positions using outcome models trained on 106M+ court records to generate probability-weighted recovery distributions. This produces NAV estimates grounded in observed outcomes rather than mark-to-model optimism. Funds seeking liquidity against a mature portfolio can contact our institutional team to discuss NAV facilities.

Discuss your matter with our institutional team.