US-based litigation finance fund Burford Capital will bankroll insolvent Go First (Mumbai International) in its arbitration case against Pratt & Whitney, according to India's The Economic Times newspaper, which reports that the firm has agreed to pay USD20 million to cover the first tranche of costs.
When Go First ended operations in May 2023, it cited rolling Pratt & Whitney engine issues as a key reason. The engine manufacturer's inability to service or replace GTF PW1100 engines in a timely manner resulted in many aircraft going out of service and contributed to what the Wadia Group-owned low-cost carrier termed a cash flow crisis. That, combined with the carrier's inability to secure additional day-to-day funding, resulted in its demise. Consequently, Go First lodged a case against Pratt & Whitney at the Singapore International Arbitration Centre, claiming around USD1.5 billion in compensation.
The arbitration remains in its early stages. However, recently, Go First's committee of creditors, led by a trio of out-of-pocket banks, voted to liquidate what remained of Go First rather than sell it at what they considered to be lowball offers. The committee is banking on the arbitration case succeeding and generating a better return for them than selling the airline.
“The creditors committee decided to safeguard itself from rising litigation costs and hence appointed the firm [Burford]," a source close to the matter told the newspaper. "This is a costly litigation to fight, but with a favourable outcome, the returns will be higher than what Go First owes to the banks. Burford is a reputable litigation finance firm. That they have agreed to invest in the case shows that it has merit and the chances of getting the compensation are big."
A Burford Capital spokesperson told ch-aviation the firm does not comment on its investments.
