Litigation firm finances Go First's legal battle against P&W

The US-based litigation fund Burford Capital will finance the insolvent company Go First (Mumbai International) in its arbitration proceedings against Pratt & Whitney, reports the Indian newspaper The Economic Times. The company has agreed to pay 20 million US dollars to cover the first tranche of costs.

When Go First ceased operations in May 2023, it cited issues with rolling Pratt & Whitney engines as the main reason. The engine manufacturer's inability to maintain or replace GTF PW1100 engines in a timely manner resulted in many aircraft being taken out of service and contributed to what the Wadia Group-owned budget carrier described as a cash flow crisis. This, coupled with the airline's inability to secure additional day-to-day financing, led to its demise. As a result, Go First filed a lawsuit against Pratt & Whitney at the Singapore International Arbitration Centre, seeking compensation of around USD 1.5 billion.

The arbitration process is still in its early stages, but recently Go First's creditors' committee, led by three insolvent banks, voted to liquidate what is left of Go First rather than sell it at what they consider to be too low an offer. The committee is banking on the arbitration process being successful and bringing it a better return than the sale of the airline.

“The creditors’ committee decided to protect itself from rising litigation costs and therefore commissioned the law firm [Burford]a source familiar with the matter told the newspaper. “This process is costly, but if it goes well, the return will be higher than what Go First owes the banks. Burford is a reputable litigation finance company. The fact that they have agreed to invest in the case shows that it has promise and the chances of compensation are high.”

A spokesman for Burford Capital told ch-aviation that the company does not comment on its investments.