It all started with the potential purchase of the Everton Soccer Club. But as the details began to emerge around one particular prospective buyer, 777 Partners, the story grew beyond the pitch and onto the airfield.
There is a Canadian connection. 777 Partners is one of the main backers of Flair Airlines, who has been in the news lately over claims regarding their Canadian ownership rule compliance. 777 also owns Australia’s Bonza airline. 777 is co-owned by Josh Wander and Steven Pasko.
According to this report, 777 is accused of moving money around and obfuscating the real source of their funding in order to purchase the soccer club. What’s the significance?
It comes down to where the money is actually coming from, and in this case it’s from the insurance industry.
“A source of financing for the parent [777 Partners] may be an insurance company, and losses in the airline business (or fraud!) would cost it a great deal of money and make it less credit-worthy.” says Gary Leff, of View From The Wing.
Leadenhall Capital Partners is the insurance company backing 777’s soccer club bid, and they have filed an active lawsuit against 777 (filed May 6th) claiming the collateral pledged ($350 million) for the potential purchase of the Everton Soccer Club was supposed to be free and clear of any other security interest. But it may not be.
The lawsuit claims “To induce Leadenhall to fund their operation, Josh Wander, along with his group of alter ego entities, “pledged” over $350 million in assets as collateral to Leadenhall, knowing all along that the assets either did not exist, were not actually owned by Wander’s entities, or had already been pledged to another lender.”
Leadenhall is also claiming that A-Cap (another insurance company) has loaned 777 billions of dollars and is “secretly controlling it”, a claim A-Cap says are “sensational and unfounded.”
The result? AM Best rating service has downgraded A-Cap to a B-minus, and A-Cap is suing them to keep their B++ rating.
Why is this getting such attention? Because of the fact that they are suing to keep their B++ rating and that has drawn attention to the downgrade, which might have been missed by the media. Throw in a football team, and you’ve got the attention of a wide swath of journalists. This story is just getting off the ground.
