By Eric Onstad
LONDON (Reuters) -Lawyers for businessman Prateek Gupta, accused of fraud by commodity trader Trafigura, told a London court on Tuesday he has run out of funds to pay legal fees and wants to negotiate a settlement.
Geneva-based Trafigura filed a lawsuit against Gupta in February last year, alleging seven companies that Trafigura said are controlled by him carried out systematic fraud involving what were supposed to be nickel cargoes.
Trafigura booked an impairment last year of $590 million due to the alleged fraud.
"They are having difficulties... in funding the remainder of the litigation," lawyer Barnaby Lowe told the London Commercial Court regarding his client Gupta and his companies.
A representative for Gupta said in a statement that there was a short-term problem with cash flow, but the defendants had "significant illiquid assets".
"The delay in realising those assets is regrettable but... once realised, those assets will without difficulty fund a comprehensive and vigorous defence to these proceedings."
Justice Simon Picken denied a request by Gupta for an immediate suspension of court proceedings for eight to 12 weeks, which Lowe said was needed to find new sources of funding and allow negotiations for a settlement.
Picken said it was important not to interrupt the current process of disclosure ahead of a trial likely to be held next year and ordered a suspension of proceedings from Oct. 1 to Nov. 29.
A court document filed by Trafigura said that Gupta's lawyers have not been paid since August 2023.
Lowe said Gupta hoped to find further funds from third party receivables worth $191 million and a claim he made in Australia worth $240 million.
Gupta failed to meet a Feb. 24 deadline to make an interim payment of 330,000 pounds to Trafigura in costs after a judge last December denied Gupta's bid to lift a global freeze on $625 million worth of his personal and business assets that has been in place since February 2023.
Trafigura said on Tuesday it did not oppose negotiations in principle, but was sceptical about the motives behind the suspension request.
"Trafigura doubts the ... sincerity to engage in such a negotiated dispute resolution process and infers that this is yet another delaying tactic," it said in a court document.
"There is a long history of settlement offers ... and nothing has come of it," David Peters, a lawyer representing Trafigura, told the court.
Hundreds of pages of new documents were released in connection with the December hearing including WhatsApp messages and emails that Gupta in his defence said show Trafigura staff came up with the fraud. Trafigura and its staff have denied the allegations.