The startling submission, accusations and evidence submitted to the United States’ District Court, Southern District of New York by UK based Leadenhall Capital (and others) against Josh Wander, Steve Pasko, Kenneth King, 777 Partners, A-Cap (and others) on the 3rd May 2024 provide, perhaps, the most compelling evidence yet, of what many, including myself, have suspected.

Namely that 777 Partners and A-Cap in their various forms and though the actions of their principals, Wander, King and Pasko are less than the sum of their parts. Months of research provide mountains of fact-based evidence of questionable business practices, the most bizarre of financing arrangements and a huge inter-dependency between King and Wander in particular, to keep their failing enterprises functioning.

The submitted Court papers are available here: Leadenhall Capital Partners LLP (& others) v Wander, Pasko, King, 777 Partners A-Cap (& others)

What started as a desire to understand the would-be owners of Everton Football Club has grown into a multiple media, regulatory and more, examination initially of their multi-club model and its finances to one that includes airlines, aircraft leasing, institutional lending and investing plus, perhaps most sadly, the future security of clients of several insurers and re-insurers in the United States and Bermuda particularly.

The significance of this funding model, business practices and seemingly regulatory ignorance will re-shape the US insurance market and its relationship with private equity and offshore re-insurers. Closer to home, from football’s perspective it will shine light on many other private equity funded football acquisitions and the growth (abuse?) of the multi-club model.

Everton’s non-response

Despite the huge significance of the above, a significance which grows with each passing news article, Moshiri, and de facto, Everton have remained tight lipped.

Throughout this huge piece of work under-taken by football fans, journalists, regulators and now the US Courts, there has remained a small number of constants. From an Everton perspective, they are Moshiri’s insistence that 777 Partners collectively remain suitable and appropriate purchasers of his shares, and Everton Football Club’s continued silence regarding the takeover, the impact the delay has had on the club, and the alternative strategies or choices when the 777 bid ultimately fails.

For Evertonians this is the really important topic. Our seemingly non-functioning board provides no re-assurance to fans, stakeholders and commercial partners. Not only that but there is no justification for their choice other than the shortest of (non-evidence backed) explanations back in September 2023. Moshiri as owner, has all but disappeared. He communicates sporadically with a small number of media contacts via his PR Company, trotting out the same mantra that everything will be fine. Indeed, echoing the words of Josh Wander and his PR company, never fully explaining the delays but promising a solution in the near future.

What sort of way is that to run a football club? What sort of way is that to treat fans? What sort of way is that to treat employees, commercial partners and others? How can one (Moshiri) be so contemptuous of those whose lives this impacts most of all?

What sort of person forces communications staff to feed media and fans alike a narrative that daily and with growing evidence becomes less and less credible?

What sort of person puts his manager and players through all the machinations of this season, whilst ultimately knowing his chosen solution will never come to fruition?

What sort of person forces individuals to compromise their careers and probably their own integrity whilst in the employment of Everton to cover for his eight years of ineptness and his greatest folly, his choice of 777 Partners?

Somebody at Everton has to burst this Moshiri induced narrative, that the current situation will be resolved successfully and that 777 have a viable future ahead for themselves but specifically, for Everton. That is clearly not the case. We, as a club, have to rise from this sense of denial and face the reality of the situation. We need leadership from within either to promote alternatives or accept reality.

The reality of continuing down this path is administration – 777’s failure to complete (which should have been recognised eight months ago) and the inability to continue funding losses and capital expenditure has only one outcome unless a solution is permitted to enter.

The audited accounts pointed in the gravest manner as to the risks ahead for Everton, and that was on the basis of a successful takeover by a solvent, funded and credible acquiror, assumed to be completed in “early 2024”. That is clearly not the case, nor ever will be if 777 Partners remain in the frame.

What are the alternatives?

(i) Moshiri allows the creditors to restructure the club’s finances, form a functioning board and allow other investors to acquire a going concern

(ii) The club enters administration as funding and perhaps creditor support ceases.

With regards to (i) this is a viable option. Without entering into details, options are available, however it requires Moshiri to recognise this as the only viable, non-administration option. It would allow sensible debt restructuring and the introduction of the fabled investors “waiting in the wings”. It is an option though that becomes less viable and more expensive as time goes by. There has always (in my mind) been an urgency to this, that urgency has increased many times over in recent days.

777 Partners and associated parties

The civil case brought about by Leadenhall Capital has huge significance. It is, of course, a series of allegations albeit backed by evidence provided by Wander himself via recorded, verbal confessions. I do not wish to prejudice the case. In a sense, the existence of this civil case and its allegations, plus other accusations and investigations elsewhere provide the background by which it is impossible to see 777’s survival and perhaps even that of A-Cap, the insurer regardless.

The bringing of allegations of double pledging assets used as security to Court by Leadenhall will have every other lender to 777 Partners et al scrambling to ascertain the status of their security arrangements. The public assertion that each of 777’s assets are ultimately pledged to A-Cap renders (if wholly accurate) all other security arrangements worthless. At best, it stops instantly all future funding, at worst lenders will attempt to call in their loans. 777 Partners do not have the liquidity to satisfy such demands, nor do their underlying investments have ready buyers. Most investments are illiquid, under or non-performing and worth much less than the value booked on the balance sheet.

If, as the Court documents suggest, ultimately A-Cap hold all the security, they, by regulatory pressure at least, will be forced sellers of 777’s assets and face all the liquidity and valuation issues described above. In reality, given their current regulatory status, this decision will be taken out of the hands of Kenneth King (CEO of A-Cap) and placed in the hands of the State regulator administrators.

It is a particularly grim scenario, particularly if as would seem likely, A-Cap’s live insurers would have to cease writing new business, there would be significant asset write-downs and no doubt, further rating write-downs.

As is already evidenced by the administration of Bonza, the sale of its Flair shareholding and the disposal of their airplane leasing business, AIP, to A-Cap, 777 Partners were finding it incredibly difficult to operate. It’s widely acknowledged within the football world that 777’s other football clubs are available for sale.

As has been well documented throughout, even before this crisis 777 faced huge problems, cash negative, under or non-performing assets and denied access to new lending sources. Now the scene looks even worse, and there can be no viable prospect of their business surviving (in my opinion).

What happens to Everton’s debt to 777 Partners?

Clearly, if 777 Partners or possibly A-Cap are in a default position, their administrators would look to recover from their debtors. Everton’s debt to 777 Partners ranks the least senior of the secured creditors – football creditors, MSP, Metro Bank and Rights and Media Funding all ranking above them. The prospects of full recovery are therefore slight. What recourse, 777 Partners have (or their administrators) is entirely dependent upon the various loan agreements in place. It’s a much greater problem for 777 than Everton. However, it clearly cuts off any additional funding to Everton.

Hence Everton will have to find alternatives very quickly, whether they be Moshiri, existing lenders or potential investors. The opening of the transfer window next month would, (however regrettably) provide a backstop – not that we want to get to that point.

Back to Moshiri

Everton were not in a clean bill of health when acquired by Moshiri in 2016, however, it is obvious to all how much the clubs circumstances have deteriorated despite the ongoing stadium build – (if being generous).

Moshiri’s misjudgements have been colossal – in every area he has touched. None more so than his choice of 777 Partners as potential, would-be purchasers. Every Evertonian, the Fan Advisory Board, the EFCSA, local and national politicians have to make it clear that his involvement is no longer welcome, that his judgement is so unsound as to not be trusted in any future decision over the club.

An interim, genuine management board has to be put in place immediately. People experienced and versed in corporate recovery, seeing off the the threat of administration if possible, restructuring the company to sell to sensible, well-funded purchasers. Otherwise it falls into the hands of administrators and all the pain that that brings.

There can be no more advocating for Moshiri, nor any advocating for his choice of 777 Partners. All of us, from match going fans, more distant Blues, through to nationally recognised politicians have to step in and ensure our rescue. It should have happened months ago, it didn’t, but it must now.