A struggle over the fate of international charter firm Zetta Jet has emerged, with current management filing for Chapter 11 bankruptcy restructuring in the U.S., while former management—but also still majority shareholders—say they have obtained an injunction in Singapore against that effort.
Zetta Jet Pte. and Zetta Jet USA filed voluntary Chapter 11 bankruptcy petitions on September 15 in the Central District of California–Los Angeles district court. Separately, the company on September 8 filed a lawsuit in the district court against Geoffery Cassidy, the former managing director.
“The debt restructuring was necessitated by the company’s recent discovery that its former managing director, Geoffrey [sic] Cassidy, had misappropriated funds from the company and committed other fraudulent activities,” the company alleged in a statement.
Zetta Jet conducted an internal investigation, and subsequently the board of directors agreed to terminate Cassidy, the company said. The board installed Michael Maher, who has held leadership roles with a privately held industrial management contractor, as interim CEO and agreed to move forward on bankruptcy proceedings.
The separate lawsuit against Cassidy alleges that he has engaged in “wrongful and illegal conduct (e.g., using company funds for personal purchases, taking free transportation and kickbacks from aircraft acquisitions)” that “wrongfully deprived Zetta Jet Pte. Ltd. and/or Zetta Jet USA, Inc. of at least $20 million to $30 million.”
Zetta Jet management maintains that it plans to continue normal business operations, honor all business reservations during bankruptcy and keep up its customer service levels. “By availing itself of the Chapter 11 process, the company will be able to continue its normal daily operations while the management team works to restructure the company’s debt, making Zetta Jet financially stronger,” Maher said. “Flight operations at Zetta Jet will continue as they always have.”
He added that Zetta Jet has ample liquidity to meet post-bankruptcy obligations. “The Chapter 11 filings will enable us to restructure the company’s debt, providing us with the increased financial flexibility to further enhance our market-leading position and ensure the long-term viability of the company.”
But while management began this process, Cassidy noted that he and another director, Li Qi, own a combined 64 percent share of Zetta Jet and that the bankruptcy filing “was done by the CEO, without the authority of the majority shareholders.”
The majority shareholders, he added, obtained an injunction from the Singapore High Court on September 19 against company directors James Seagrim and Stephen Matthew Walter and Zetta Jet itself “to stop them, whether by themselves or through their agents, solicitors or special counsel, from carrying out any further steps in or relating to the Chapter 11 filings, until trial or further order.”
Further, Cassidy said, the shareholders will retain U.S. counsel “to deal with the damage done to the companies. A shareholder meeting has been called for 3 October 2017 to change the management.”
Cassidy said a plan is in place for the ongoing operations of Zetta Jet, adding that the majority shareholders are discussing cash-flow requirements with potential investors. “The majority shareholders are committed to protecting and furthering the interests of all stakeholders in Zetta Jet and will take every effort towards this end. The majority shareholders are confident that they and the new investors can perform existing commitments and that Zetta Jet will thrive and achieve greater heights.”
The legal struggles come two years after the company launched the Zetta Jet brand and nearly a year since the announcement that it had agreed to merge with fellow Singapore private aviation company Asia Aviation, along with U.S. aircraft management specialist Advanced Air Management.
Zetta Jet remains headquartered in Singapore with Asia Aviation under the core Zetta Jet Pte. brand, while Advanced Air Management, which is based at Los Angeles-area Van Nuys Airport, was renamed Zetta Jet USA.
By last spring, Zetta Jet had counted among its fleet a dozen Global 5000s and 6000s and four Challenger 650s.