OneJet CEO grilled on collapse

Creditors search for airline’s assets

Some two years ago, OneJet CEO Matthew Maguire appeared in Pittsburgh to tout two new destinations for his growing regional business airline.

On Monday, Mr. Maguire was back in Pittsburgh — this time under far different circumstances, as he tried to answer queries about the collapse of the same airline, which stopped flying Aug. 29.

For about two hours, attorneys for creditors and U.S. bankruptcy trustee Rosemary Crawford peppered Mr. Maguire with questions as they sought to determine whether there were any funds available to repay the hundreds of investors, airports, or businesses owed money by the carrier.

At the moment, those prospects don’t look good. In a bankruptcy filing, OneJet listed no financial assets and $43.9 million in liabilities. And on Monday, Mr. Maguire told the trustee that the airline’s bank statement in September listed a negative $5,000 balance.

Asked what caused the airline to halt flights in August, Mr. Maguire put it simply. “We didn’t have sufficient funds to continue operations.”

At the time, the airline had 30 to 50 employees, he said.

Despite tens of millions of dollars of investment, he related that the airline’s financial position “certainly became precarious” last summer.

“There was obviously tremendous concern,” he said.

As for when he knew as CEO that the situation was grim, Mr. Maguire said he could not specifically recall.

Monday’s meeting marked the first time Mr. Maguire appeared in connection with the Chapter 7 bankruptcy that OneJet was forced into last fall by four creditors.

He declined comment to reporters after the meeting.

Much of the session concentrated on what assets or property the airline possessed as well as the existence of any bank statements, tax returns, leases or contracts, investor-related, or business documents available.

Although Mr. Maguire was unable to answer many of the questions involving documents, he and his attorneys vowed to provide as much information as they could.

Mr. Maguire did say that OneJet at its peak leased eight aircraft, all of which were repossessed as the airline’s financial problems grew worse. He said the airline didn’t object.

“They advised us that they were taking the aircraft back and we said OK,” Mr. Maguire related.

To date, about the only thing of value that has been recovered through the bankruptcy process is $85,000 representing part of the proceeds of the sale of a corporate jet that was taken back from OneJet.

The airline’s largest creditor, PrimeAir Venture Partners, which is owed $10 million, is made up of his parents, Mr. Maguire said.

His father, Patrick Maguire, also invested $3 million to help get the airline started, but has not been paid back, Mr. Maguire said. Nor have any of the other investors, he added.

To help raise money, OneJet did three rounds of stock offerings — two involving “extremely sophisticated former airline executives” and another for more local investors.

Among the local investors were three members of the Allegheny County Airport Authority board — chairman David Minnotte, vice chairman Robert Lewis, and Jan Rea.

The investments of Mr. Lewis and Ms. Rea triggered controversy when they were revealed last summer, prompting the board to adopt a policy banning such stakes.

Ms. Rea has said that she and her husband Don bought a “minimum amount” of notes offered by OneJet to potential investors so they could take advantage of charters it offered to Naples, Fla.

According to a lawsuit filed last month, investors who bought at least $150,000 in OneJet notes could avail themselves to the flights.

During questioning Monday, Mr. Maguire said that Mr. Minnotte and Mr. Lewis both initially invested $250,000 in the airline, followed by unspecified smaller amounts.

Neither Mr. Minnotte nor Mr. Lewis could be reached for comment on Monday. Mr. Lewis’ attorney, Patrick Cavanaugh, declined comment after Monday’s hearing.

All three board members have said they have divested of their investments. Mr. Maguire said Monday he did not know if Mr. Minnotte or Mr. Lewis were still investors.

The airport authority is suing OneJet to recover $763,000 of the $1 million in incentives it paid the carrier for flights from Pittsburgh International Airport.

The lawsuit filed last month by 51 investors owed money by the airline claimed that Mr. Minnotte and Mr. Lewis “used their positions on the board of the airport authority to influence the authority’s use of grant money for the benefit of OneJet.”

Authority solicitor Jeffrey Letwin has dismissed such assertions as “an absolute bunch of garbage.”

As part of the authority’s investment in OneJet, Mr. Lewis was supposed to serve as a nonvoting member of the OneJet board. But Mr. Maguire said Monday there have been no board meetings over the past two years.

Kirk Burkley, attorney for the four creditors who forced OneJet into bankruptcy in October, said he’s not sure at this point whether any money can be recovered for them or any others. “I still think it’s very early. I think there’s a lot to learn,” he said.

Mr. Burkley said Monday’s meeting was an effort to start to “put this puzzle back together.”

Ryan Cooney, attorney for the 51 investors who sued Matthew and Patrick Maguire, Mr. Minnotte, Mr. Lewis, and others over OneJet, said it was interesting to hear there were no board meetings in the past two years, that Matthew Maguire was the only board member, and that he did not know if there were any meeting minutes available.

“It’s very concerning for a company that took in at least $60 million in investment to not follow those corporate formalities,” he said.

The lawsuit filed by Mr. Cooney alleges that the Maguires burned through more than $60 million in investors’ funds in less than 18 months “with little or no explanation of how the money was spent.”