Avianca has filed a counter lawsuit against its second-largest shareholder to thwart a potential injunction blocking its plans to form an alliance with United Airlines, marking the latest development in a rapidly escalating legal dispute among the carrier’s shareholders.

In a filing to the US Securities and Exchange Commission on 27 March, Avianca confirmed that it has filed a counterclaim against Kingsland Holdings opposing its application for an injunction to block negotiations between the Colombian carrier and United Airlines, while rejecting all allegations included in a prior lawsuit.

The counterclaim also asked the court to stop Kingsland disseminating confidential information about the carrier and its majority shareholder, Synergy.

The growing legal dispute comes after Avianca filed notice to the US Securities and Exchange Commission on 31 January confirming plans to deepen commercial ties with United Continental Holdings by entering into a strategic alliance with the US carrier.

Kingsland filed a suit in the New York State Supreme Court on 28 February to block that partnership, accusing Avianca’s chairman German Efromovich of forcing the deal through despite receiving larger offers from two other international airlines.

Kingsland said in its original suit: “The United transaction diverts the vast majority of the consideration United is paying for a partnership with Avianca – a valuable asset that may provide United with an estimated annual profit in excess of $75 million – to Efromovich’s financially shaky affiliates. He torpedoed the strategic process by clandestinely negotiating a transaction with United.”

On 15 March Kingsland filed a motion seeking a preliminary injunction to block the deal, so as to prevent “the cabal of insiders that controls Avianca” from proceeding with their “unlawful attempt to ram through the egregiously one-sided United transaction in order to divert hundreds of millions of dollars to themselves in violation of their fiduciary and contractual duties.”

In its counterclaim, Avianca rebuffed those allegations and accused Kingsland of running a smear campaign to break up negotiations with United.

“Avianca has at all times performed its role under the parties’ shareholder agreement, while Kingsland has explicitly breached its obligations,” the company said in a statement.

“Kingsland’s legal manoeuvres are a heavy-handed attempt to obtain greater rights in the courtroom than it previously negotiated for and agreed to in the parties’ shareholder agreement.”

The countersuit described Roberto José Kriete, Kingsland's chairman, who is named as a defendant, as a “disloyal director who has worked actively to undermine the company’s strategic goals” while attempting to “pressure United into abandoning any negotiations with Avianca” because he perceives the deal to be against “his narrow self-interest and his other personal ventures in the aviation industry”.

It also accused Kriete of leaking confidential boardroom information in a bid to obstruct the deal while engaging in a smear campaign against Avianca.

In a statement, Kingsland denied any impropriety, rejecting “any assertion that Mr Kriete has acted improperly in any way or other than in the best interests of Avianca and its minority shareholders”.

The New York State Supreme Court was scheduled to rule on Kingland’s petition for preliminary relief on 28 March, but this hearing has been pushed back to 6 April.

Counsel to Avianca Holdings

Skadden Arps Slate Meagher

Simpson Thacher & Bartlett

Counsel to Kingsland

Cadwalader Wickersham & Taft

Boies Schiller & Flexner

Counsel to Synergy

Gibson Dunn & Crutcher

Counsel to United

Kirkland & Ellis