Go First Lenders Mull Litigation Financing Against Pratt & Whitney — BQ Exclusive

Lenders led by Bank of Baroda will finalise the plan in a meeting later on Thursday, the two people mentioned above told BQ Prime on the condition of anonymity.

The lenders feel that they have a strong case against Pratt & Whitney as the airline’s bankruptcy is directly linked to the lack of supply of engines, the first of the two people quoted above said.

If they decide to go forward, the lenders and their advisers will approach overseas funds to finance the litigation, the two people said.

Litigation financing allows the fund to take over the legal costs of the arbitration with the promise of getting a portion of the claim in the suit. Typically, funds get 20–30% of the claim amount for financing litigation, the second of the two people quoted above said.

While litigation financing is a relatively new concept in India, this is a common practice abroad. Since international arbitration is a significantly expensive proposition, such models allow for more efficient capital to be deployed.

Go First is currently under insolvency proceedings in India and is grounded. A bidding process initiated by the financial creditors for the airline has not yielded any buyers. Jindal Group, which was the sole potential bidder, has also backed out of the process, according to the first person quoted above.

Lenders will likely send the airline to liquidation, both the people quoted above said.

Queries mailed to Bank of Baroda and Go First’s resolution professionals were not immediately responded to. This story will be updated when the responses are received.