Bonza’s US owner a house of cards on the brink of collapse, claims new lawsuit

The US owner of collapsed Australian budget airline Bonza, 777 Partners, has been accused in a lawsuit filed in New York of a $600m fraud.

A lawsuit filed in the US has described the Miami-based owner of grounded airline Bonza as “a house of cards on the brink of collapse” and accused the firm of a multimillion-dollar fraud.

The firm 777 Partners, headed by Josh Wander and Steve Pasko, is alleged to have borrowed against $US350m ($530m) worth of assets it did not own, did not exist or were promised to someone else.

London asset management firm Leadenhall Capital made the allegations in documents filed in the New York District Court.

The lawsuit alleged Leadenhall had provided 777 Partners with about $US600m in financing in May 2021 on the basis the assets pledged as collateral were “free and clear” of any other security interests.

“If the borrowers did not actually own the assets pledged as collateral or had already pledged those assets to another lender, the entire facility would effectively become an illegal and unsecured piggy bank that an individual like Wander could use to finance risky private equity investments in aviation, media and sports, including professional football teams while paying lower rates under the pretence of secured financing,” said the documents filed by Leadenhall.

“As it turned out, that is exactly what happened here.”

Budget carrier Bonza was first announced in October 2021 after founder and chief executive Tim Jordan secured the backing of 777 Partners.

Bonza chief executive Tim Jordan.

The firm’s stake in aircraft leasing company AIP Capital assured Bonza of access to an order book of new Boeing 737 Max 8s but that all fell apart in recent months.

Weeks after 777 Partners’ 49 per cent stake in AIP Capital was taken over by US insurer Advantage Capital Holdings or ACAP, Bonza was issued with an event of default notice.

Making matters even murkier, ACAP was named in the Leadenhall lawsuit as the “Wizard of Oz behind the 777 Partners’ curtain”.

“Around the same time that ACAP’s unusual role in 777 Partners’ affairs became privately known to Leadenhall the entanglement between 777 Partners and ACAP became the subject of extensive public reporting,” the lawsuit said.

“ACAP, dominated and controlled by its chairman and CEO Kenneth King, was reportedly the ‘silent partner’ behind Wander’s businesses who both sits on the committee that oversees 777 Partners’ investments and provides the ‘financial firepower’ to fuel 777 Partners’ deal making.”

It was alleged ACAP had provided $US700m to 777 Partners since December last year to support aviation-related investments, and as security, ACAP received additional equity in 777 Partners.

The insurance company also provided $US290m in loans to support 777’s investment in soccer teams, such as A-League club Melbourne Victory and financially troubled Premier League club Everton.

The case is not the first to accuse 777 Partners of fraud, as a separate matter was filed in the Delaware Court of Chancery last year.

The lawsuit, lodged by former 777 Partners’ principal Timothy O’Dunne, accused the firm of setting up Bonza and its Canadian airline, Flair, to fail by overcharging for the aircraft it leased to them.

Late Friday, Bonza administrator Hall Chadwick was still trying to find a financial saviour for the carrier which has not operated since Monday, April 29.

More than 300 staff have been stood down and informed Bonza was unable to pay their wages for April.

Jetstar, Virgin Australia and Qantas have been providing seats to stranded Bonza customers free of charge. Qantas has also made its EAP, or Employment Assistance Program, available to Bonza employees seeking counselling and advice.

Originally published as Bonza’s US owner a house of cards on the brink of collapse, claims new lawsuit