US charter specialist Zetta Jet (United States of America) (Burbank) and its parent company Zetta Jet PTE Ltd have filed for Chapter 11 bankruptcy protection in the Central District of California, LA division. In a press release, Zetta says that it needs to restructure its debt following the discovery that former Managing Director, Geoffrey Cassidy, had committed fraudulent acts, including the misappropriation of company funds.
The airline has also filed a lawsuit against Cassidy, and has appointed Michael Maher as interim CEO to guide the company through the restructuring process and legal issues.
"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.
In its lawsuit, Zetta Jet contends that Cassidy, along with his wife Miranda Tang, utilised company funds "to purchase and/or renovate personal property including boats and related items valued conservatively at between $3 million and $10 million." They also claim that Cassidy purchased property in France and Singapore, luxury vehicles, held extravagant and expensive parties across the globe, and used company jets for personal transportation.
Zetta's lawsuit puts the total amount of company funds used by Cassidy for personal purposes at a conservative estimate of between USD20 – 90 million.
In addition to misappropriation of company funds, Zetta claims that Cassidy received significant kickbacks from Jetcraft for the purchase of seven Bombardier Aerospace Global Express aircraft, to the tune of USD2 million per aircraft.
"The kickbacks inflated the financing obligations of Zetta Jet Pte. Ltd.; and the kickbacks continue to cause harm to this day," the suit says.
Jetcraft has denied the allegations, saying the claims are "wholly inaccurate".
Suffering financially from Cassidy's actions, Zetta claims it was then forced to seek outside capital, diluting the shareholding of the other co-owners. During this transaction, they claim Classidy misrepresented the deal to gain additional shares for himself.
In its press statement, Zetta emphasises that it will continue to operate as per normal.
"Flight operations at Zetta Jet will continue as they always have. The Company has ample liquidity to meet all of its post-bankruptcy obligations and our commitment to providing our passengers with safe, reliable and luxurious air travel remains unchanged," Maher said.
22/09/2017 - Article updated to include Jetcraft's statement.
