Prospective Everton FC buyers face lawsuit over asset transfers

Prospective Everton FC buyers face lawsuit over asset transfers | Insurance Business Asia

Reinsurance

Prospective Everton FC buyers face lawsuit over asset transfers

The reinsurance holding firm has been accused of avoiding the repayment of debts

Reinsurance

By
Kenneth Araullo

Following intense scrutiny over its attempt to buy Everton FC, reinsurance holding firm 777 Partners is now in hot water over a lawsuit filed in New York.

In a legal battle, Obra Capital has initiated a lawsuit against the investment firm, accusing it of attempting to shield assets from creditors by transferring two “cash-rich” subsidiaries to co-founder Steve Pasko without any financial compensation. The subsidiaries in question are Sutton Specialty Insurance Co. and Sutton National Insurance Co.

The legal action comes in the wake of 777 Partners’ agreement in September to purchase 94.1% of Everton FC, a move that has led to criticism regarding the financial stability of the Miami-based firm.

Obra Capital is seeking to block the transfer of the two insurance subsidiaries, arguing that such a move would protect the interests of all creditors associated with 777 Partners. The lawsuit is part of a series of legal challenges faced by 777, including multiple lawsuits over unpaid debts and previous legal actions filed by Obra against the investment firm and the insurer, both of which are pending.

Questions surrounding 777’s ability to finance such acquisitions have led to increased examination from Premier League officials, as reported by Bloomberg in December, citing sources familiar with the matter.

777 Re, the conglomerate’s reinsurance arm, has had its ratings downgraded over its financial stability and risk management practices

Besides Everton, 777 Partners holds majority stakes in several international sports teams, including Hertha Berlin, Genoa Cricket and Football Club, Standard Liege, Red Star FC, and Vasco da Gama.

Obra Capital’s lawsuit highlights concerns over 777’s recent investments in sports teams across Europe and Latin America, suggesting that these actions have cast doubts on the source of its funding and the overall health of its business operations.

The lawsuit states, “Until recently, 777 maintained a relatively low profile that kept its questionable business practices and penchant for stiffing creditors out of the public eye. Then in late 2021, 777 began buying multiple sports teams in Europe and Latin America. 777’s flashy shopping spree raised questions about the source of its funding and the health of its business operations.”

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