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Berlin, Germany – A legal dispute between the family of Russian collector Dmitry khatib and litigation funder LitFin has escalated, revealing tensions over a $208 million valuation of 135 paintings seized by French authorities. The case,filed in February 2024 in Germany,centers on allegations that LitFin attempted to exert undue control over the litigation and refused to cover further legal expenses. Khatib, who initiated the lawsuit, passed away in July, leaving his estate to continue the legal battle.
LitFin, headquartered in London and led by CEO Stefan Kravec, specializes in financing complex commercial disputes, including antitrust, insolvency, and arbitration cases. The firm currently manages a portfolio valued at $5.8 billion across over 25 international disputes. The Khatib family initially praised LitFin’s involvement following the 2022 seizure of their paintings, stating their intention to “follow the perpetrators around the world” with the firm’s assistance.
The dispute arose in late 2024 when LitFin allegedly refused to fund additional legal costs, despite having already invested $4.3 million in the Khatibs’ claims. According to lawyer jean-Jacques Castro, who is now taking control of the case following his father’s death, LitFin requested his and his father’s removal from the claim and sought to work directly with the law firm Dentons. LitFin reportedly offered to pay Dentons’ outstanding $2.3 million in fees contingent upon these conditions.
Further complicating matters, Heppner, the Khatibs’ attorney, alleges that Kravec offered to cover Dentons’ invoices in exchange for Heppner’s withdrawal from the case against art dealer Yakov Frisch, whom the Khatibs accuse of involvement in the paintings’ illicit sale. Heppner described the offer as “unspeakable,” accusing Kravec of attempting to “control the litigation.” The lawsuit against Frisch and the arbitration with LitFin are currently paused pending the settlement of Khatib’s estate.
The 135 paintings at the center of the dispute are works of Russian Avant-Garde art.In May 2024, Artnews reported that Dentons engaged Doerr Dallas Valuations, a UK-based appraisal firm founded and led by Rachel Doerr, to assess the paintings’ value for insurance purposes. Doerr Dallas assigned a valuation of $208 million, but the appraisal included a “caveat” that Doerr declined to disclose to Artnews. The paintings were seized in a joint operation by french authorities in November 2022, following an investigation into alleged fraud and money laundering. The investigation targeted several individuals,including Frisch,and focused on the provenance of the artworks. The paintings were reportedly being offered for sale through various auction houses and galleries, including a planned sale at Christie’s Paris.