Zetta Jet trustee’s motion for JetCraft settlement denied by court

By Sarah Lizee

Olympia, Wash., Feb. 24 – The motion from Zetta Jet USA, Inc.’s Chapter 7 trustee seeking court approval of a settlement with Jetcraft Corp. was denied Thursday by the U.S. Bankruptcy Court for the Central District of California, according to an order.

As previously reported, Chapter 7 trustee Jonathan D. King said that under the settlement, the debtors would recover $9.5 million from Jetcraft, which King had previously filed a lawsuit against on behalf of Zetta.

However, the proposed settlement drew pushback from creditors, who took issue mainly with the trustee’s request to enjoin all parties to the Chapter 7 case and all current or future defendants in the litigation from seeking contribution or indemnity in any respect from Jetcraft on account of claims asserted in the litigation.

Background

While operating, the debtors entered into a single purchasing program to purchase almost $500 million of Bombardier aircraft through Jetcraft.

The trustee alleged that Jetcraft paid Zetta’s former managing director Geoffrey Cassidy over $1 million in bribes to induce the debtors to run their purchasing program through Jetcraft and Bombardier.

He also alleged that the purchase prices for the aircraft under the program were almost $100 million above fair market value.

And, Jetcraft received millions of dollars in commissions, profits and other payments in connection with the program, he said.

The adversary proceeding brought 11 counts against Jetcraft for aiding and abetting breach of fiduciary duty, civil conspiracy, breach of California unfair competition law, fraudulent misrepresentation, fraudulent concealment/non-disclosure, four separate fraud transfer counts, turnover of property of the estate, and disallowance of claims.

The settlement payment was set to be made in two equal installments: the first within three days after an order approving the settlement becomes final, and the second no later than July 10.

Zetta Jet is a Burbank, Calif.-based private aviation charter company. The company filed for bankruptcy on Sept. 15, 2017 under Chapter 11 case number 17-21386.

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