Asset Purchase or Consumer Loan: One State High Court Weighs In

In a case closely watched by players in the asset purchase space, the Colorado Supreme Court ruled that the purchase of a future interest in the litigation proceeds of a tort lawsuit – usually automobile accidents, slip and falls, construction site injuries and medical malpractice – constituted a loan subject to that state’s consumer credit laws.  Selling an interest in the potential proceeds of personal injury cases is not new. The Purchaser pays the Seller, who is a plaintiff in a tort lawsuit, money in exchange for the right to receive a  portion of the proceeds of litigation.  Although the Colorado case touches on the form of the transaction in the merchant cash advance space, the applicability of the decision to such transactions seems limited to consumer transactions. Continue reading “Asset Purchase or Consumer Loan: One State High Court Weighs In”