Go plans litigation finance for ₹12K cr

Lenders to Go First plan to scout for litigation finance to bring home up to ₹12,000 crore tied up in various lawsuits, two people aware of the development said, as the bankrupt airline stares at likely liquidation. The amount includes an arbitration award that it won against engine maker Pratt & Whitney at the Singapore International Arbitration Centre (SIAC) earlier this year, as well as several other lawsuits under way.

- Anirudh Laskar, Shayan Ghosh

The airline has moved a Delaware court to enforce the arbitration ruling, but has run short of funds to pursue the case after it stopped flying in May. The idea of litigation finance was suggested by Go First’s resolution professional since all the current “parameters are pointing towards liquidation" as the only alternative left, one of the two people said.

"₹12,000 crore is due to the airline but stuck in litigation. Even if 50-60% of this comes, lenders can recover a large part of their dues and the outstanding payments can be completed," the first of the two people said on the condition of anonymity.

“The suggestion is that existing legal costs can be paid off to lawyers by the lenders, and then a credit fund or a large stressed-debt fund can be roped in for financing all the litigation going forward and help Go First win the cases," the person said. The committee of creditors (CoC) will meet and finalize the plan before January and a potential investor is expected within the next two months, the person added.

“Total litigation costs may be less than ₹100 crore, but on the upside, a favourable court verdict may fetch up to ₹12,000 crore," said the person.

“Apart from the case against Pratt & Whitney, there are a few other smaller court cases, winning which may fetch $200-300 million more to Go First," said the first person.