The National Company Law Tribunal (NCLT) has asked Go First, the grounded budget airline, to respond to the decision by its Committee of Creditors (CoC) to liquidate the company. The CoC made this decision after finding that the plans to save the airline through insolvency were not following legal guidelines.
The tribunal was informed by the resolution professional (RP) that the CoC had already invested over ₹200 crore in the insolvency process, but since the airline isn’t generating any cash, they approved a plan to get third-party funding for their ongoing legal case against US engine maker Pratt & Whitney. This case is being fought at the Singapore Court of Arbitration.
Go First has reportedly hired Burford Capital, a US firm, to finance the legal battle, with the first payment expected to be around ₹180 crore.
However, the NCLT raised questions about whether Indian law allows third-party funding for such litigation and whether this funding can be considered part of the liquidation costs under the Insolvency and Bankruptcy Code (IBC). The tribunal also asked if any money won in the legal case could legally be used to repay the third party that funded the litigation.
Go First filed for bankruptcy protection after owing ₹6,521 crore to creditors, blaming its financial troubles on faulty engines supplied by Pratt & Whitney, which grounded 34% of its fleet in 2022.
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