Interesting read..15 Jan 2024 13:36
Cessna is well-known as an aviation aircraft manufacturer. As many businesses do, one of its subsidiaries found itself with two outstanding and unenforced arbitration awards that were worth a lot of money in theory. But despite their cumulative value of more than $100 million, these unenforced awards remained mere “legal paper” until Cessna partnered with Burford to provide a solution.
Cessna’s experience is not uncommon. Businesses spend millions on litigation and arbitration only to find that winning the dispute isn’t always the end of the process, as they may be left with a judgment or award that still requires further time and money to enforce. In addition to appeal risk, recalcitrant judgment debtors may claim insolvency or move assets offshore, presenting the winning side with the need to invest more time and money to identify valuable assets, gain recognition of their judgment in key jurisdictions, and pursue third parties or proxies that hold the debtor’s assets, as these types of debtors rarely keep valuable interests in their own name.
In other words, turning that piece of paper into cash requires still more expenditure, significant expertise and further litigation, resulting in ever-increased delay in the satisfaction of the award.
Burford routinely helps businesses like Cessna that find themselves in this situation, through a combination of capital provision and asset recovery expertise, enabling the enforcement of these outstanding judgments and awards to recover value that might otherwise be lost. Cessna’s work with Burford illustrates the benefit of funded enforcement expertise, and below we explain how it was able to assign its awards, maximize its recovery and generate immediate liquidity.
The background of the case
Both of Cessna’s awards arose when counterparties defaulted on aircraft leasing agreements made with Cessna’s subsidiary. After winning the arbitrations, however, the awards remained unpaid and with no immediate prospect of cash recoveries, as the judgment debtors were well-connected Emiratis with the majority of their assets in the UAE and refused to pay.
The Wichita, Kansas-based company had only a limited sense of defendant assets available to pursue and faced years of complex, high-cost and risky enforcement proceedings across multiple jurisdictions, some of them not well known to the Cessna in-house team or their existing local law firm. Their goal was to monetize a portion of the pending value without further distraction or spend.
Burford solved this challenge with a hybrid “money now, money later” assignment deal that gave Cessna immediate capital and transferred the cost, time and risk of the enforcement campaign to Burford while retaining for Cessna a back-end interest to ensure a further significant payment in the event of a successful recovery.
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