Dubai-based investment fund, KZ Capital General Trading LLC, has dropped a lawsuit against three ex-board members of JetSmarter (Fort Lauderdale Executive) after previously alleging they were duped into handing over control of the business jet booking platform.

As reported by Bloomberg Law, the Chancery of the State of Delaware agreed to dismiss with prejudice the matter of KZ Capital General Trading LLC v. Sergey Petrossov, Thomas J. Ridge, Christophe Navarre, and Jetsmarter, Inc. (case no: 2020-0750-PAF). The case attracted attention because of the individuals involved. Nurali Aliyev, the grandson of Kazakh politicial strongman Nursultan Nazarbayev, runs KZ Capital, while the defendants included JetSmarter founder Petrossov, former LVMH CEO Navarre, and former Homeland Security Secretary Ridge.

It was alleged the then JetSmarter board members falsely induced KZ Capital into handing over control of JetSmarter to an entity called ClearLake Capital Group LP., a US private equity company.

Founded in 2012 by Petrossov, JetSmarter's operations centred on the sale of annual memberships to individuals, allowing them to book flights on business jets that were affiliated with, but not owned by, JetSmarter. Despite actively selling memberships and achieving some brand recognition, JetSmarter was consistently unprofitable and in need of capital.

In 2016, during its third round of external capital raising, KZ Capital agreed to tip in an initial USD15 million for a 1% stake, valuing the booking platform at USD1.5 billion. Investor materials prepared by Petrossov and sent to Aliyev suggested, among other things, that JetSmarter would expand its operations to Almaty International within the year. This did not happen. JetSmarter's finances and operations continued to head south, and the company was caught up in several high-profile incidents, including an unflattering CNBC investigation. In 2017, ClearLake provided funding to JetSmarter in the form of a USD60 million bridging loan that would later convert into USD180 million of preferred stock and valued the company at USD400 milllion. In 2019, the Thomas Flohr-controlled VistaJet Group Holding acquired the booking platform. In 2020, LZ Capital sued on four counts.

Those counts included:

  1. that JetSmarter breached the terms of the 2016 agreement's "most favoured nations" provision;
  2. that the defendants breached their fiduciary duties, including that Petrossov disseminated false and misleading information to induce KZ Capital to invest;
  3. that Ridge and Navarre breached their contractual fiduciary duties to KZ. This claim arose from letter agreements both signed upon joining the board, acknowledging they owed fiduciary duties as directors; and
  4. that JetSmarter and Petrossov engaged in negligent misrepresentation based on the alleged disclosure violations in the second ground.

In early 2022, a Delaware judge dismissed the third and fourth counts, partially dismissed the second, and left the first standing.

This week's legal filing did not disclose the reason for discontinuing the lawsuit. However, Bloomberg suggests a settlement was reached. ch-aviation has contacted KZ Capital, Petrossov, Ridge, and Navarre for comment.