The investment manager trying to buy Everton FC is being sued by a creditor who wants to stop the firm from transferring two subsidiaries, claiming that the transaction was designed to “shield” the assets.
Obra Capital said in a New York lawsuit Thursday that 777 Partners LLC, which agreed in September to buy 94.1% of the Premier League soccer club, attempted to transfer the two “cash rich” units in order to avoid repaying its debts. Obra said that 777 transferred Florida-based Sutton Specialty Insurance Co., and Sutton National Insurance Co. to co-founder Steve Pasko “for no consideration.”
Obra said that the purchase of Liverpool’s Everton and other sports teams has raised questions about 777’s financial health. The takeover is facing increasing scrutiny from Premier League officials after questions were raised about the finances of Miami-based 777, Bloomberg reported in December citing unidentified people familiar with the situation. 777 also has majority stakes in Hertha Berlin in Germany, Genoa Cricket and Football Club in Italy, Standard Liege in Belgium, Red Star FC in Paris and Vasco da Gama in Brazil.
“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,” Obra said in the lawsuit. “777’s flashy shopping spree raised questions about the source of its funding and the health of its business operations.”
Obra says it loaned 777 $40 million in June 2020 and another $15 million the following year. While Obra says that 777 in June 2022 owed it more than $63 million, the debt currently stands at $22.4 million.
777 faces multiple lawsuits over unpaid debts and Obra says the transfer should be blocked to protect all of the investment firm’s creditors. Obra has also filed previous lawsuits against 777 and the insurer over the debts, both of which are still pending. 777 didn’t immediately respond to an email seeking comment on the lawsuit.
777’s problems stems from its pursuit of sports franchises, particularly Everton, which Obra said was one of England’s “most financially troubled soccer clubs.” The additional attention from the deal led 777’s “house of cards” to begin “crumbling down,” Obra said.
The case is Obra Capital Management LLC vs. 777 Partners LLC, New York State Supreme Court, New York County.
Photo: Beto of Everton celebrates scoring his team’s first goal during a match on March 2. Photographer: Alex Livesey/Getty Images
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