Texas Judge Defers Approval of 777 Partners' $2.5 Million Bankruptcy Loan; Rival Funding Offer Filed
The Miami investment firm, which listed at least $2.7 billion in funded debt when it filed for Chapter 11 on August 9, is also fighting over whether its case belongs in Texas or Florida.
A $2.5 Million Loan Just Stalled a $2.7 Billion Bankruptcy
On August 9, 2026, 777 Partners, the Miami investment firm that once tried to buy Everton FC, filed for Chapter 11 bankruptcy protection in a federal court in Texas[3][5]. The next day, the court bundled the case with 23 related entities into one proceeding[9]. Court filings put its debt at more than $2.7 billion[3][17].
Two days after that, on August 11, the bankruptcy judge in Texas was asked to approve something that sounds almost trivial by comparison: a $2.5 million loan to keep the company running while it winds down. The judge said no, at least for now, and told the company to come back with another option[1].
That is strange on its face. Why would a court balk at 0.1% of the total debt? The answer is that this small loan carries outsized power over who controls what happens to the rest of the money — and that fight is really what this bankruptcy is about.
Why a Rounding Error Draws a Real Fight
When a company files for bankruptcy, it often needs new cash just to keep the lights on — payroll, lawyers, basic operations — while it sells off what it owns. That new cash is called debtor-in-possession financing, or DIP financing. Bankruptcy law lets a court give this new loan special treatment: it gets repaid before older debts, and it can jump ahead of liens that already exist on the company's assets[1][3].
That special treatment is the whole point, and it is also the problem. A lender willing to front new money to a bankrupt company can also write the budget the case has to follow, set the deadlines, and shape the terms of any asset sale. Lawyers have a name for this pattern: loan-to-control. A small amount of cash, offered on the right terms, can buy outsized say over a much larger pot of assets.
That is why $2.5 million against $2.7 billion in debt was worth a contested hearing[1]. 777 Partners' side says the math is simple: no new money means no orderly sale, and everyone recovers less. Objectors counter that cheap financing is exactly how insiders keep control of a wind-down that an outsider should be running instead.
On August 13, two days after the judge's rebuff, 777 Partners told the court a rival financing offer had shown up[2]. Who is behind it, and on what terms, has not been made public yet.
Two Courts, One Company
While the DIP fight plays out in Texas, a second and separate battle is underway over which state should even be handling this case. Three investment funds — Vida Longevity Fund, now renamed Obra Insurance Fund, along with two related Vida credit funds — got there first. On July 16, 2026, weeks before 777 Partners filed its own case, they filed an involuntary Chapter 7 petition against the firm in Florida, days after winning an amended $26 million judgment against it[8].
The difference between the two paths is not cosmetic. Chapter 11, the Texas route, lets 777 Partners' existing managers keep running the company as it sells off assets — they are called the "debtor in possession." Chapter 7, the Florida route, would replace them with an independent trustee, who could investigate and potentially sue over money moved before the filing[4].
Judges in both states have now put off ruling on where the case belongs and how it should be funded[4]. Neither side disputes that 777 Partners will not operate as a going concern again. The dispute is over who gets to close it out, and who gets to look under the hood while doing it.
Where the Real Money Sits
Behind both fights is a single number: about $1.259 billion, the amount owed to A-CAP, an insurance group that is by far 777 Partners' largest creditor. That debt comes from a facility that matured back in November 2024 and has been in default ever since[4].
This is not an ordinary business loan. A-CAP's money ultimately traces back to the life insurance policies and annuities its subsidiaries sell — funds that are supposed to be there when policyholders retire. Utah's insurance regulator ordered A-CAP to divest from 777 Partners back in April 2024. Regulators say A-CAP put roughly $400 million more in anyway that same year, and that Utah insurers had ceded about $1.7 billion in reserves to a 777-linked reinsurer[12].
That is why state insurance regulators in Utah, South Carolina, and Bermuda are watching this docket as closely as the creditors are. AM Best downgraded two A-CAP insurers' financial strength ratings on January 23, pointing to falling new business, rising policy surrenders, and reputational damage from the public regulatory fights[12]. A-CAP has since brought in outside capital through a deal with Oaktree Capital Management, and beat back a Utah rehabilitation petition when a state court dismissed the case[14][15].
A Fraud Case Hangs Over Every Filing
Underneath the financing and venue disputes sits a pending criminal case. Federal prosecutors have charged 777 Partners co-founder Joshua Wander and the firm's chief financial officer with wire fraud and securities fraud, alleging a scheme to defraud lenders and investors of more than $500 million. Prosecutors say the evidence includes a bank-balance screenshot they allege was altered in Microsoft Paint[6]. Wander resigned in 2024 and is awaiting trial in New York[5][6].
Separately, the Securities and Exchange Commission charged Wander and co-founder Steven Pasko in October 2025, alleging they misled investors while raising about $237 million between January 2021 and May 2024[7]. These are allegations, not findings — but they are central to why the involuntary Chapter 7 petitioners in Florida argue the company should not be trusted to police its own wind-down[6][7][8].
777 Partners' own account is different: the firm says it already began winding itself down out of court back in 2024, and argues its team knows the assets and paperwork better than an outside trustee would[3][4].
Who Is Actually Watching, and Who Isn't
Mainstream U.S. political outlets on the right and left have barely touched this story. Coverage instead sits with legal and financial trade press. Bloomberg's write-up leads with the fraud indictment and the failed Everton bid before getting to the creditor fight actually before the judge[5]. Law360, the legal trade outlet closest to the docket, has covered each hearing closely, though its description of one session as "contentious" is its own characterization rather than a quote from the courtroom[1][2].
Overseas coverage splits along industry lines. Aviation trade outlets cover 777 Partners mainly as an aircraft lessor, with some labeling it "Texas-based" — technically the filing venue, but a label that sidesteps the Miami headquarters at the center of the venue fight[10]. Bermuda's Royal Gazette and insurance trade press focus on the unwind of 777 Re, the firm's reinsurance unit, largely apart from the U.S. fraud case[18][12].
At the more opinionated edges, one libertarian-leaning banking newsletter has framed 777 Partners as proof that private credit and private-equity-owned insurers are an unregulated bubble threatening retirees broadly — a policy argument built on top of one company's collapse, not a finding the court record itself supports[16]. An Everton supporter blog, for its part, reads the bankruptcy filing as retroactive vindication of arguments fans made against the club's would-be owner in 2023[11].
What nobody disputes is the scale of what's left to fight over, and how little of it there may actually be. The portfolio has been picked over since 2024, and most unsecured creditors are likely to recover only cents on the dollar no matter which court ultimately takes the case[3][5]. The Texas and Florida judges have not said when they'll rule.
Summary
777 Partners, a Miami investment firm, filed for Chapter 11 bankruptcy protection on August 9, 2026, in the U.S. Bankruptcy Court for the Northern District of Texas[3][5]. The filing covered 777 Partners, an affiliate called 600 Partners, and related entities. The court ordered 23 affiliated cases jointly administered the next day[9]. Court papers disclosed at least $2.7 billion in funded debt[3][17].
The case hit a snag almost immediately. On Tuesday, August 11, the bankruptcy judge declined to approve, even on an interim basis, the company's request to borrow $2.5 million in "debtor-in-possession" financing — a loan taken out after filing to keep the lights on[1]. The judge urged the company to go find an alternative. Two days later, on Thursday, August 13, 777 Partners told the court a competing funding offer had come in[2].
At the same time, a second court is involved. Three investment funds had already filed an involuntary Chapter 7 liquidation petition against 777 Partners in Florida on July 16, 2026, days after winning an amended $26 million judgment[8]. Judges in both Florida and Texas have deferred rulings on where the bankruptcy belongs and how it gets funded[4].
The genuine dispute is about control, not survival — nobody claims 777 Partners will keep operating as a going concern. A Chapter 11 in Texas lets the company's current management run the sale of what is left. A Chapter 7 in Florida hands the assets to an independent trustee. The largest single creditor, the insurance group A-CAP, is owed roughly $1.259 billion including interest under a facility that matured in November 2024 and has been in default since[4]. Whoever funds the case gets substantial influence over how, and to whom, the remaining assets go.
The Event
777 Partners LLC, 600 Partners LLC and affiliated entities filed voluntary Chapter 11 petitions on August 9, 2026, in the U.S. Bankruptcy Court for the Northern District of Texas[3][5]. On August 10 the court entered an order jointly administering 23 affiliated cases[9]. At a hearing on August 11, the judge deferred a decision on interim approval of $2.5 million in debtor-in-possession financing and asked the debtors to seek an alternative[1]. On August 13, the debtors told the court they had received a competing financing offer[2]. Separately, judges in Florida and Texas have both postponed rulings that would determine where the case proceeds[4].
Undisputed Facts
- 777 Partners, 600 Partners and related entities filed Chapter 11 petitions on August 9, 2026 in the Northern District of Texas, disclosing at least $2.7 billion in funded debt obligations[3][17].
- On August 10, 2026, the court ordered 23 affiliated cases jointly administered under case number 26-90190[9].
- On July 16, 2026, three funds — Vida Longevity Fund LP (now Obra Insurance Fund LP), Vida Insurance Credit Opportunity Fund II LP and Fund III LP — filed an involuntary Chapter 7 petition against 777 Partners in the Southern District of Florida, days after obtaining an amended $26 million judgment[8].
- A Texas bankruptcy judge deferred interim approval of $2.5 million in debtor-in-possession financing at an August 11, 2026 hearing and asked the debtors to produce an alternative[1].
- On August 13, 2026, 777 Partners informed the Texas court that a competing financing offer had been received[2].
- About $1.259 billion of the disclosed debt, including interest, is owed under a facility with the insurance group A-CAP; it matured in November 2024 and has been in default since[4].
- The Securities and Exchange Commission charged co-founders Joshua Wander and Steven Pasko on October 16, 2025, alleging they misled investors while raising roughly $237 million between January 2021 and May 2024[7].
- Federal prosecutors charged Wander and the firm's chief financial officer with wire fraud and securities fraud counts tied to an alleged scheme to defraud lenders and investors of more than $500 million; Wander resigned in 2024 and awaits trial in New York[6][5].
- 777 Partners agreed in September 2023 to buy Farhad Moshiri's 94.1% stake in Everton FC; the deal lapsed in June 2024 without Premier League approval, and The Friedkin Group completed its purchase of the club in December 2024[19].
The Pressure
Strip away the moralizing and blame. What structural realities persist regardless of which narrative wins?
- Control of the wind-down is the real prize
- Nobody argues 777 Partners will operate again. The fight is over who liquidates it. Chapter 11 in Texas keeps existing management in charge as debtor in possession; Chapter 7 in Florida installs an independent trustee with power to investigate and sue over pre-bankruptcy transfers[4][8].
- Why a $2.5 million loan matters so much
- Debtor-in-possession financing, or DIP, is a loan made to a company after it files for bankruptcy. Here is the mechanism the whole dispute turns on: to attract a lender willing to fund a company that just defaulted, the bankruptcy code lets the court give that new loan a "superpriority" position — it gets repaid before existing creditors, and can be secured by a lien that jumps ahead of, or "primes," liens already on the assets. The lender also writes the budget and the deadlines the case must meet. So a lender who puts up a small sum can effectively set the schedule, the sale terms, and the order of repayment. That is why $2.5 million — a rounding error against $2.7 billion of debt — drew a contested hearing[1][3]. The debtors' honest case is that no new money means no orderly sale at all. The objectors' honest case is that cheap money buys expensive control, a pattern lawyers call loan-to-control.
- Insurance money is the collateral underneath
- A-CAP's exposure is not ordinary corporate lending. Its life insurers and annuity businesses funded it. Utah regulators ordered divestment from 777 Partners in April 2024, and say roughly $400 million more went in anyway during 2024; Utah insurers had ceded about $1.7 billion in reserves to 777 Re[12]. That is why state insurance regulators, not just creditors, are watching this docket.
- A pending criminal case shadows every filing
- Co-founder Joshua Wander awaits trial in New York on charges tied to an alleged scheme to defraud lenders and investors of more than $500 million, including a bank-balance screenshot prosecutors say was altered in Microsoft Paint[6]. Charges are allegations, not findings. But the existence of the case is why objectors argue current management should not police its own wind-down[5][8].
Material realityThe assets are finite and shrinking. 777 Partners began selling off holdings more than a year before the filing, and the portfolio — private credit, aircraft leasing, sports clubs, insurance-linked assets — has been picked over since 2024[3][5]. Against at least $2.7 billion in disclosed funded debt, roughly $1.259 billion sits with a single creditor, A-CAP, on a facility that has been in default since November 2024[3][4]. That math means most unsecured creditors will likely recover cents on the dollar regardless of venue; the disputes over the $2.5 million loan and over Texas versus Florida change who decides the split and who gets investigated, not the size of the pile. Everton FC is no longer exposed: the 777 deal lapsed in June 2024 and The Friedkin Group completed its purchase in December 2024[19]. A-CAP, meanwhile, has already absorbed a ratings downgrade and continues to operate with outside funding support from Oaktree Capital Management[12][15].
Narrative as a weaponThree groups are shaping how this reads. The debtors' side pushes an orderly-wind-down story: keep the case in Texas, fund it modestly, sell assets over time, and the estate recovers more. The involuntary petitioners push a stewardship story: a firm whose founder faces federal fraud charges should not run its own liquidation, and only an independent trustee will chase pre-filing transfers. A-CAP pushes a policyholder story — its exposure is annuity money, so recovering it is a duty, not a play — while U.S. insurance regulators press the counter-story that A-CAP's own valuations overstated these assets in the first place[12]. Above all of them, a fourth narrative is being written by finance commentators who want 777 Partners to stand for private credit as a whole[16]; that is a policy argument built on top of a single company's collapse, and the court record so far speaks to the company, not the category. Notably absent: mainstream U.S. political outlets on both right and left have not covered the hearing, so nearly all available framing comes from trade press with industry-specific blind spots.
How Each Side Sees It
Each major actor’s view — how it frames things, its underlying incentive, and how it’s materially affected. Tap a side to read it.
Frames it asThe company's case is that an orderly Chapter 11 wind-down under existing management recovers more money for everyone than a fire sale. Its executives — chief operating officer Mark Shapiro filed the first-day declaration — argue the firm already began an out-of-court wind-down in 2024 and knows where the assets and the paperwork are[3][4]. Their argument on the loan is that even a very small amount of new money, $2.5 million, is what keeps payroll and lawyers running so assets can be marketed rather than dumped[1]. On venue, they say the operating entities and the aircraft-leasing business sit in Texas, so Texas is where the case belongs[10].
WhyRetaining control of the sale process. In Chapter 11 the existing managers stay in place as the "debtor in possession"; in Chapter 7 an independent trustee replaces them and can investigate them[4].
Impact on themIf the Florida Chapter 7 prevails, management loses control and a trustee gains subpoena power over past transfers. If Texas holds, the same team runs the disposition of what remains of a portfolio that once spanned private credit, airlines, sports teams and insurance[3][5].
Frames it asA-CAP is by far the largest creditor, owed about $1.259 billion including interest on a facility that has been in default since November 2024[4]. Its strongest argument is that it is not a speculator but the funding source behind life insurance and annuity policies — money it must eventually pay to policyholders. From that view, maximizing recovery on 777 exposure is a policyholder-protection duty, not a creditor grab. A-CAP has also pointed to steps it took to shore up itself: it signed a deal with Oaktree Capital Management to bring outside funding into its troubled life insurers[15], and its subsidiaries beat back a Utah rehabilitation petition when a state court dismissed the case[14].
WhyRecovering as much as possible on more than a billion dollars of soured exposure, and doing so on a timetable and through a process it can influence — which is exactly what funding a bankruptcy case buys[4].
Impact on themA-CAP's regulatory position already turned on this exposure. Utah's insurance regulator ordered A-CAP to divest from 777 Partners in April 2024; regulators say the companies instead put in roughly $400 million more during 2024[12]. Utah insurers had ceded about $1.7 billion in reserves to 777 Re[12]. AM Best downgraded the financial strength ratings of two A-CAP insurers on January 23, citing falling new premium, rising surrenders and reputational damage from publicized regulatory rulings[12].
Frames it asThese funds went to court first, in Florida, seeking liquidation rather than reorganization[8]. Their case rests on a simple point: there is nothing left to reorganize. A firm accused by the SEC and federal prosecutors of falsifying its own financials should not, they argue, be trusted to run its own wind-down[6][7]. They hold an amended $26 million judgment and want an independent trustee who can claw back money moved before the filing[8]. Their objection to a small insider-friendly loan is the classic one described below: cheap money can buy expensive control.
WhyMaximizing recovery for creditors who sit behind A-CAP in line, and getting an independent party to examine transfers made in the years before the collapse[8].
Impact on themIf the case stays in Texas under Chapter 11 and the financing gives the lender priority, unsecured creditors' recovery narrows. If Florida's Chapter 7 proceeds, a trustee's clawback suits become the main source of money for them[4][8].
Frames it asState regulators frame this as consumer protection, not a Wall Street dispute. Their specific evidence: they say A-CAP used internal valuations that overstated the worth of high-risk 777-linked assets, while independent audits valued the same holdings far lower[12]. Utah ordered A-CAP insurers to stop writing new business over reserving concerns and Commissioner Jon Pike sought rehabilitation for A-CAP affiliates[12][13]. A Utah court dismissed the rehabilitation case, and regulators and A-CAP later paused litigation to mediate the 777 Re fallout[14][18]. Regulators' underlying principle is that annuity money belongs to retirees, and that an insurer's investment portfolio should not double as a private-equity sponsor's credit line.
WhyPreventing an insurer insolvency that would fall on state guaranty funds and on individual policyholders — and defending the reserving standards they enforce[12][13].
Impact on themThe bankruptcy recovery directly affects how much of A-CAP's 777 exposure is written off. That in turn shapes reserve adequacy, ratings, and whether regulators escalate again[12].
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The Bias Ledger average rating 3.6
The same story, as framed by outlets across the spectrum, ordered least to most biased. The bias score (1 = straight, 10 = heavily spun) is an AI assessment of that framing — click an outlet to see its track record. The tell is the word choice or omission that reveals the angle.
| Outlet | Vantage | Bias | How they frame it | The tell |
|---|---|---|---|---|
| Law360 | U.S. center, legal trade | 2 | "Judge Sends 777 Partners Back To Table On Ch. 11 Funding" and "777 Partners Gets New DIP Offer After Contentious Hearing" | Procedural and close to the docket, but the word "contentious" is the reporter's characterization of a hearing rather than a quote from any party. It carries a hint of drama the underlying order does not. |
| Global Restructuring Review | U.K.-based restructuring trade press | 2 | "777 Partners left in limbo as Florida and Texas judges defer key DIP and venue rulings" | The most balanced framing found — it treats the two-court standoff as the story. "Left in limbo" is mildly editorial, implying drift rather than a normal early-case deferral. |
| The Royal Gazette | Bermudian, independent, reinsurance-focused local daily | 2 | "Utah regulator pauses lawsuit over 777 Re fallout" | Frames the whole saga through the Bermuda reinsurance unwind and regulator mediation. The omission is the U.S. creditor and criminal side; readers get the insurance plumbing without the fraud case. |
| Bloomberg | U.S. center, financial | 3 | "777 Partners Files Bankruptcy After Creditors' Liquidation Push" | Leads with the fraud indictment and the failed Everton bid. Accurate, but it foregrounds the sports-and-scandal narrative over the creditor priority fight that is actually driving the case. |
| ch-aviation | Swiss-based aviation trade | 3 | "US lessor 777 Partners files for Chapter 11 bankruptcy" | Calls 777 Partners a "lessor," and a partner Irish outlet labels it "Texas-based." Both are narrow: the aircraft-leasing arm is one piece, and the Texas label adopts the filing venue that is itself in dispute. |
| The Esk | U.K., independent Everton FC finance blog | 6 | "The end of 777 Partners, the Chapter 11 filing, and what it admits about Everton" | Reads the bankruptcy backwards through the failed Everton takeover — the phrase "what it admits about Everton" treats a debt schedule as vindication of a club-ownership argument. Fan-side framing, openly so. |
| The Institutional Risk Analyst (Opinion) | U.S. libertarian-leaning banking and credit newsletter | 7 | "777 Partners and the End of Private Credit" | Generalizes from one alleged fraud to an entire asset class, and invokes "millions of retirees" whose annuities are at risk. That is a policy argument, not a report on this case. |
References
- Judge Sends 777 Partners Back To Table On Ch. 11 Funding — Law360 · U.S. legal trade publication owned by LexisNexis; subscription-funded, minimal political orientation
- 777 Partners Gets New DIP Offer After Contentious Hearing — Law360 · U.S. legal trade publication owned by LexisNexis
- Investment Firm 777 Partners Hits Ch. 11 To Handle $2B+ Debt — Law360 · U.S. legal trade publication owned by LexisNexis
- 777 Partners left in limbo as Florida and Texas judges defer key DIP and venue rulings — Global Restructuring Review · U.K.-based restructuring trade press (Law Business Research); reader/subscriber-funded, industry-facing
- 777 Partners Files Bankruptcy After Creditors' Liquidation Push — Bloomberg · U.S. financial newswire owned by Bloomberg L.P.; centrist, markets-oriented
- Founder and CFO of Investment Firm 777 Partners Charged With $500 Million Fraud Scheme — Federal Bureau of Investigation · U.S. federal law enforcement agency; prosecutorial primary source, states allegations not findings
- SEC v. Joshua Wander, Steven Pasko, Damien Alfalla, 777 Partners LLC, and 600 Partners LLC (Litigation Release 26419) — U.S. Securities and Exchange Commission · U.S. federal securities regulator; enforcement primary source, states allegations
- Vida Longevity Fund, LP et al v. 777 Partners LLC: Chapter 7 Petition ('$26M Debt') — OffshoreAlert · U.S./U.K. investigative financial-crime publication; subscription-funded, adversarial toward offshore finance
- Filing Alert: Signal National Chapter 11 — Bondoro · U.S. distressed-debt data service; docket-derived, sells to institutional investors
- US lessor 777 Partners files for Chapter 11 bankruptcy — ch-aviation · Swiss aviation-industry data and news service; subscription-funded, airline-industry facing
- The Analysis Series: The end of 777 Partners, the Chapter 11 filing, and what it admits about Everton — The Esk · Independent U.K. blog by Everton finance analyst Paul Quinn; explicitly supporter-aligned
- Utah issues order for A-Cap insurers to stop doing business due to reserving concerns — InsuranceNewsNet · U.S. insurance trade publication; advertiser-funded by insurance industry, generally industry-sympathetic
- Utah Insurance Commissioner Jon Pike seeks rehabilitation for A-Cap affiliates — Beinsure · International insurance/insurtech trade site; advertiser-supported aggregator
- A-Cap subsidiaries avoid rehabilitation as Utah court dismisses case — Insurance Business · Australian-owned (Key Media) global insurance trade press; advertiser-funded, broker/insurer audience
- Oaktree grabs control of Atlantic Coast Life Co. in blockbuster A-Cap deal — InsuranceNewsNet · U.S. insurance trade publication; advertiser-funded by insurance industry
- 777 Partners and the End of Private Credit — The Institutional Risk Analyst · U.S. subscription banking/credit newsletter by Whalen Global Advisors; libertarian-leaning, skeptical of private credit and Fed policy
- 777 Partners filed for Chapter 11 bankruptcy with $2.7B in debt — USA Herald · Small U.S. digital outlet focused on litigation and finance; ad-supported, thin editorial staffing
- Utah regulator pauses lawsuit over 777 Re fallout — The Royal Gazette · Bermuda's independent daily newspaper; privately owned, heavy reinsurance-sector coverage given local industry
- 777 Partners Files for Bankruptcy After Everton Bid — Read Everton · U.K. Everton FC supporter news site; ad-supported fan media