Trustee objects to JetSuite's bankruptcy reorganization plan

By Doug Gollan, August 28, 2020

JetSuite’s Chapter 11 reorganization plan is “not feasible,” according to the trustee

The trustee overseeing JetSuite’s Chapter 11 bankruptcy is urging the judge to reject the company’s proposed plan. The filing today came hours before the deadline for objections and ahead of a scheduled Sept. 3rd court date.

The objection pointed to close connections between related companies and asserted the plan lacked credibility. A key point of contention is the inclusion of non-consensual third-party releases. That would have protected insider companies and executives from future litigation from creditors who didn’t approve of the plan.

JetSuite JSX JetSuiteX Corporate Structure

JetSuite JSX structure
JetSuite’s trustee cited “insider” transfer of assets in asking a judge to reject its reorganization plan. Under the plan Delux Public Charter, LCC, which operates the JSX brand, would likely obtain assets from Superior Air Charter, LLC, which owned now-bankrupt Part 135 operator JetSuite.

Companies that are liquidating or do not resume business are not generally eligible for such discharges.

Andre R. Vara, the trustee, wrote that representatives for Superior Air Charter, LLC, the official name for JetSuite, “have not shown that the third-party releases are necessary to the debtor’s reorganization.”

Vara also appeared to doubt that Superior has any real plans to reorganize. He noted since grounding its fleet in April, it’s not generating revenue. He also quoted a previous filing from JetSuite claiming it had never generated significant profits in more than a decade.

JetSuite previously told the court, “Despite maintaining consistent bookings and flights, the debtor was unable to meet a level of daily flight hours which would allow it to do more than break even on operating costs, leaving aside the burden of its fixed expenses.”

The trustee said he couldn’t understand how it now planned a profitable operation. He pointed that it now has no customers and just three aircraft.

Reorganization or liquidation?

He went on to note, “The plan as originally filed did not even contemplate a reorganization.” It instead “provided for the debtor’s assets to be transferred to its insider DIP lender, and for the debtor to be liquidated.”

The trustee said only after informally commenting it appeared JetSuite was ineligible to implement the non-consensual third-party releases did its representatives change their filing. They positioned the transfer of Superior’s assets to Delux Public Charter, LLC, as a way to “pause its operations until market and other conditions make a resumption of operations feasible.”

Delux Public Charter operates scheduled flights using reconfigured regional aircraft. It under the JSX brand, although it was initially known as JetSuiteX.

Vara called the revisions, “formal, not substantive.” He said JetSuite is in essence “liquidating.” The trustee said he wants the court to “deny confirmation of the plan unless third party releases are limited to creditors who voted to accept the plan.” He added, “Alternatively, the court should deny confirmation because the plan is not feasible.”

SuiteKey members opting into the reorganization get credits on JSX or between 3 and 15 cents on the dollar. The customers include Netflix with nearly $1 million in funds. In total clients held $50 million in unused credits at the time JetSuite grounded its fleet.

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