Zetta Jet gets $8.5 million to fund restructuring

Zetta Jet files for Chapter 11

One of Zetta Jet’s lessors and customers will provide up to $8.5 million in loans to help it restructure and exit Chapter 11 bankruptcy protection.

The loan has been provided by Scout Aviation, a lessor, owned by financier Nathanial Rothschild. Scout is now officially known as a stalking-horse bidder and will compete against other companies to buy Zetta Jet before it emerges from bankruptcy protection in February.

Zetta Jet is now being manged by Jonathan King, the court appointed Chapter 11 trustee. He is being advised by Seabury, a leading airline restructuring firm, and law firm DLA Piper.  Michael Maher, who joined as interim CEO, has left the company.

“With the help of my advisors, the management team and I have been working on a business plan to restore the company to profitability. We have already begun restructuring our aircraft fleet to operate more efficiently and otherwise reduce redundant costs,” says King. “Now with funding in place, the company will have financial resources to implement that plan and sufficient liquidity to fund the Company through a competitive sale process culminating in emergence under a plan of reorganization.”

The company is asking the court to approve a $4.5 million loan from Scout Aviation which will be used to cover Zetta Jet’s running costs as well as restructuring fees.

“Through this process, we hope to preserve and harvest the going concern value of Zetta Jet to maximize recoveries for the Company’s stakeholders, continue to provide a superior product for our valued customers for years to come, and minimize any disruption to our employees, vendors and other constituents,” says King.

Chapter 11 bankruptcy protection has been used by many US airlines – since 1978, there have been over 195 airline bankruptcies in the US.  But this is thought to be the first time that a business jet operator – or Part 135 operator – has restructured in this way. Most struggling business jet operators file for Chapter 7 liquidation.

King is keen to stress that Zetta Jet is still operating as normal: “I also want to recognize the hard work and dedication of management, led by co-founders Matthew Walter and James Seagrim, and all the Zetta Jet employees that have worked tirelessly to ensure that the Company has had no service interruptions and maintained its ARGUS Platinum rating as well as Wyvern Wingman and IS-BAO safety ratings throughout the restructuring process.”

The uncertainty about the Chapter 11 filing led to a fall in charter customers but Zetta Jet says many are now returning.

“Scout Aviation has been a good business partner to the Company and this financing commitment demonstrates its continued confidence in the Company, the exceptional experience Zetta Jet provides travellers worldwide, and its ability to achieve its potential,” said King.

Also read: Zetta Jet shareholders fight over Chapter 11 filing and criminal allegations

Advisers to trustee
Restructuring: Seabury Consulting Group –  Michael Cox and David Fowkes
Legal advisers: DLA Piper – John Lyons, Robbin Itkin, and Stuart Brown

Adviser to Scout Aviation II
Dawn Coulson, Epps & Coulson