Fresh woes for 777 Partners, Bonza as more lawsuits filed

A former soccer club president and a company that owns a stadium, both affiliated with Standard Liège, have joined the list of complainants filing lawsuits against 777 Partners, the embattled former minority shareholder in Flair Airlines (Edmonton) and majority shareholder in the now-insolvent Bonza (Sunshine Coast).

Immobilière du Standard de Liège, was sold to 777 Partners in 2022 along with Standard Liège, a Belgian professional football club. 777 paid EUR12 million euros (USD12.9 million) for Immobilière, an entity created in 2015 that owns the club's Stade de Sclessin, with former players and former club president Bruno Venanzi holding stakes. The money was to be paid in tranches, and 777 made the first payment but defaulted on the second tranche of EUR3.5 million (USD3.75 million), due on April 15, and a separate payment for the same amount due to Venanzi on April 20.

Venanzi and Immobilière are the club's primary creditors. Both are asking for the seizure of 777’s assets in Belgium, including the shares that Venanzi gave up in 2022. When 777 Partners bought in, it promised to pump capital into the debt-ridden club. Instead, Standard was hit with transfer bans after the club failed to pay transfer fees, bonuses, VAT, and social insurance contributions.

In addition to its fast unravelling aviation interests, 777 Partners' soccer plays are also under pressure as the investment firm - which another complainant in a separate matter calls "a giant shell game at best, and an outright Ponzi scheme at worst" - struggles to make good on its financial obligations. An attempt it made to take over England's Everton Football Club has been described as a farce, and pressure is mounting on majority shareholder Farhad Moshiri not to sell.

The soccer shenanigans parallel 777's aviation woes, which culminated in Bonza going out business last week and a London-based asset management company, Leadenhall Capital, filing a writ against several 777 entities as well as Joshua Wander, Steven Pasko, and Kenneth King. Wander and Pasko are co-founders and managing partners of 777 and several other entities, while King is chairman and CEO of Advantage Capital Holdings LLC (A-Cap) as well as its primary shareholder.

Leadenhall alleges 777 Partners is a ponzi scheme

The writ alleges the respondents pledged over USD350 million in assets (aircraft) as collateral to Leadenhall, knowing that the assets did not exist, or were not owned by the pledging entity, or had been double-pledged. In exchange for the pledges, Leadenhall provided a secured credit facility. In September 2022, the lender received a tip-off that sparked an investigation. It now alleges the respondents had been double-pledging assets as collateral to purportedly secure multiple lines of credit.

"Wander and Pasko are operating a giant shell game at best, and an outright ponzi scheme at worst, that takes money in from investors and lenders and shuffles it around to various money-losing alter egos in the enterprise to disguise their true financial condition," a May 3 filing to the US District Court Southern District of New York reads. "The enterprise is propped up and able to attract new lenders and investors only by the patronage of A-Cap, which pays off the enterprise’s last-minute obligations, including 777 Partners’ own payroll, in a whack-a-mole fashion to keep 777 Partners’ creditors at bay, if only temporarily, and to avoid the entire scheme from being laid bare in public."

In addition to the Belgian and Leadenhall lawsuits, the filing notes that 777 Partners and its affiliates have been named in 16 other lawsuits collectively asking for more than USD130 million.

• Change Lending LLC sued 777 Partners in January 2024 seeking USD30 million in damages for breach of contract. The complaint alleges that 777 failed to produce certain financial information to verify its financial condition and operations, thereby triggering a right for the investor to redeem its preferred equity;

• Three lessors led by Corvus Lights Aviation sued 777 Partners in December 2023 for USD30 million over missed lease payments for four aircraft;

• In July 2022, the MALT Family Trust, a shareholder in 777-controlled entity Phoenicia and board member Timothy O'Neil-Dunne, commenced legal action against 777 and one of its aviation subsidiaries, seeking damages of at least USD22 million for an alleged fraud in which the defendants allegedly used corporate entities to deprive the investor of its ownership interest in the subsidiary;

• In the same month, two lenders, Vida Longevity Fund and Obra Capital Management, sued 777 for defaulting on a USD59.7 million loan. They managed to auction off USD41.5 million in collateral, leaving an unpaid principal of over USD20 million in debt;

• Balanced Management LLC sued 777 Partners in December 2023 to recover an unpaid debt of USD11.2 million;

• In March 2024, Nakula Management Limited sued Wander and 777 Partners to stop them from transferring assets pending the finalisation of arbitration concerning a EUR9 million (USD9.7 million) debt;

• 777's landlord, 1 Madison Office Fee LLC, sued 777 Partners in September 2023 for failing to pay a USD5 million security deposit;

• In December 2023, Lasse Meilsoe sued to recover more than USD2 million from two unpaid promissory notes;

• Former 777 Partners principal Peter Meyers sued in January 2024, chasing more than USD2 million in unpaid compensation plus unspecified management interests;

• American Express Travel Related Services Company sued 777 Partners in March 2023 over USD324,009 in unpaid Amex bills;

• A former landlord sued Wander for USD150,000 in 2021 over property damage;

• In April 2023, a recruitment firm called Oxbridge sued 777 Partners for USD94,000 in unpaid bills after 777 acknowledged the debt but admitted to slow-rolling them;

• In September 2023, 777 Partners investor Timothy O'Neil-Dunne sued for the disclosure of statutory and other documents he alleged should have been provided to all members of Phoenicia's board.

• Two class actions, namely Eido Hussam Al-Nahhas v 777 Partners LLC et al., and Joseph Morgan et al. v 777 Partners LLC et al., in which 777 is a co-defendant, allege a predatory lending scheme that violates the US's Racketeer Influenced and Corrupt Organizations (RICO) Act. One of the complainants states that the aggregate amount in controversy exceeds USD5 million, and both complaints seek treble damages for RICO violations.

777 Partners burns Bonza

After shopping his Bonza business plan around to multiple uninterested potential investors, founder and CEO Tim Jordan got a warmer reception at 777 Partners. After talks across 2021 and 2022, which Jordan previously told ch-aviation were conducted entirely online due to Covid travel restrictions, 777 became a majority shareholder and the principal source of aircraft and funds for Bonza. The airline operated for 15 months before folding in late April 2024.

Ahead of the first creditor's meeting on May 10, Australia's Financial Review is citing emails between 777 Partners and A-Cap dated March 22 in which they discussed winding up Bonza. In an email, AIP Capital Managing Partner Jared Ailstock tells Kenneth King that "we are moving at full speed ahead to get out of there ASAP and wind this up." Late on April 29, 2024, AIP seized the four Bonza B737-8s managed by them on behalf of the owner, A-Cap-controlled Phoenix Aviation Capital.

AIP was 777 Partners' aircraft asset manager and was partly owned by them. It is now partly owned by A-Cap. The Financial Review reported that Ailstock inadvertently cc'd Bonza CFO Lidia Valenzuela into the email, which landed with a thud at Bonza HQ but also further undercuts Jordan's claim on the day the airline shut down that the repossessions came out of the blue. As previously reported in ch-aviation, Bonza received lease default notices on April 17. Two of those lease default notices were signed by Wander.

In recent days, all four Bonza aircraft have been assigned to a new entity, a Queensland-based entity called De Lore and Associates Pty Ltd, a company controlled by Jeremy de Lore, a former captain at China Southern Airlines (CZ, Guangzhou). De Lore's LinkedIn profile describes his current business activities as "supporting aircraft owners transitioning aircraft between operators."

In a May 7 statement, Bonza's administrator, Hall Chadwick, said it had held talks with the aircraft lessors but had "regretfully been advised that the lessors will continue to enforce their rights under the termination notices and, subject to their own requirements and arrangements, seek to reposition the fleet elsewhere." ch-aviation understands at least some of the B737-8s are going to LOT Polish Airlines (LO, Warsaw Chopin).