An upstart budget airline based out of Vancouver has been hit with a lawsuit from a former partner seeking to foreclose on the company’s assets.
Inovent Capital announced March 12 it has filed a petition in B.C. Supreme Court, stemming from a $120,000 loan it provided to Canada Jetlines in July 2014.
The investors claim the airline used the money for business purposes but failed to repay the loan after Canada Jetlines terminated its agreement with Inovent in February.
Inovent has a general security agreement with Canada Jetlines that entitles it to all the carrier’s assets if the loan is not repaid, according to the claim.
"Our board is disappointed that Jetlines continues to disregard its contractual obligations to Inovent," Inovent CEO David Brett said in a statement.
"We remain committed to vigorously protecting the rights of our shareholders."
Canada Jetlines president David Solloway said in an email to Business In Vancouver that his company made a “generous” offer to settle with Inovent but the former partner came back with a large demand.
“We acted honestly and in good faith and at every juncture of the relationship with Inovent,” Solloway said.
“The management of Jetlines was disappointed that Inovent did not choose to respond to its prior offer of settlement in the amount of $120,000 plus $30,000 to be applied towards expenses. Jetlines remains open to entertain reasonable offers from Inovent to settle matters and will continue to respond in a timely manner.”
In November, Inovent filed a prospectus seeking to raise $50 million to help get Canada Jetlines off the ground.
And by the following month, the two groups had signed a US$438-million order for five of Boeing’s (NYSE:BA) 737 MAX aircraft, with plans for Canada Jetlines and Inovent to merge into one company.
Canada Jetlines is expected to begin offering service out of Vancouver by mid-2015 using leased airplanes.
