Highlights – LSE:LIT

• Litigation Capital Management said a funded party failed to obtain permission to appeal a commercial litigation loss.

• The investment, carried at £5.0m (A$9.5m) on 30 June 2026, will now be written off.

• The setback follows a FY26 net loss of A$165.7m and a move into an orderly portfolio run-off.

• A covenant Waiver from lender Northleaf was extended to 13 November 2026 pending a longer-term amendment.

One more door has closed for a litigation funder already winding down its book. Litigation Capital Management (LSE: LIT) told the market on Monday 9 November 2026 that a party it funds had failed to secure permission to appeal a commercial litigation loss, meaning an Investment carried at £5.0 million, or A$9.5 million, as at 30 June 2026 will be written off.

The decision and the write-off

The announcement is short and the consequence is clear. With the route to appeal shut, the asset no longer carries value on the balance sheet. Writing off £5.0m reduces reported Assets and is likely to weigh on profit and net asset value for the relevant period. The company did not name the case in material available at the time of writing.

Permission to appeal acts as a gatekeeping step in the courts. Once it is refused, the original judgment generally stands, and for a funder the capital committed to that claim is effectively lost. For LCM, that turns a carried valuation into a realised loss.

A run of adverse outcomes

This is not an isolated knock. In July 2026, the AIM-quoted funder disclosed that permission to appeal a separate competition claim had been rejected, leading to a £0.8m write-off. On 8 October, it reported an unsuccessful judgment in an Australian Insolvency claim funded entirely from its own balance sheet, with A$2.9m of Shareholder capital deployed; adverse costs insurance was in place.

Later in October, LCM received a termination notice on a funded collective action before the Competition Appeal Tribunal, a claim co-funded by its Fund 2 and valued at A$2.4m as at 30 June 2026. The company said it disputes that termination.

The Balance Sheet backdrop

Full-year results to 30 June 2026, published on 30 September, set the context. LCM reported a net loss after tax of A$165.7m, against A$72.9m a year earlier, and net liabilities of A$53.6m, down from net assets of A$114.4m. Eight investments concluded during the year, seven of them as losses, producing a net realised loss of A$63.9m. Operating expenses were cut to A$11.0m from A$18.0m a year earlier.

A strategic review did not produce a transaction. The group is now in an orderly run-off, managing existing cases to conclusion with no new investments. Its Northleaf Debt Facility was amended to US$125m with Maturity pushed to December 2030, and cash from investments goes first to debt repayment.

Lender terms in focus

On 2 November, LCM said Northleaf had extended a covenant waiver by two weeks to 13 November 2026, as conditions for the longer-term facility amendment were described as close to completion. Loan interest stays 2.00% per annum higher during the extension, with no additional one-off fee.

Risks shareholders face

For a Business in run-off, each concluded case directly shapes how much value can be returned after lenders are repaid. Further losses would deepen the net Liability position, and the outcome of the disputed collective action termination remains open. Higher interest during the waiver period adds a further cost while the facility talks conclude. Litigation outcomes are binary by nature, which makes timing and size of recoveries hard to predict.

Signposts for the weeks ahead

The 13 November waiver deadline is the nearest marker for followers of UK small cap financials. Investors in LSE stocks of this kind will also watch for completion of the long-term Northleaf amendment, the Annual General Meeting already convened by notice on 5 November, and any further case resolutions as the portfolio is worked down.