Can the financial experts correct/clarify this:
- The module of this 777 partners/investors is each "investment" has different "investors", i can become one of their "partners" and invest money with them in one or more of their "investments" but not in all of them.
The point of the whole thing is lack of transparency. There are valid reasons to do that. Financial reporting requirements mean hiring experts, and they don't work cheap. There are also less valid reasons to do that, such as money laundering, Ponzi schemes and accounting fraud.
They claim they don't sell equity stakes by choice, though of course that's hard to prove. If you work for one of the businesses, you can have an equity stake in it without being considered a third-party investor under US law. Get enough of those and you have to start filing reports with the SEC, which they very much do not want to do, because then they're dealing with auditors who would object to the actions leading to the all the complaints against their businesses.
The one founder, Steven Pasko, is obviously a junk bond guy given his resume. He's probably the one finding investors to buy the unregistered high-yield bonds I infer they issue in private sales to raise capital, again to avoid reporting requirements. The details in a couple of lawsuits made by former employees of Flair Airlines allege that they loaded that subsidiary up with even more expensive debt when bailing them out and marked up aircraft purchases by 25%, presumably to generate funds to make their own bond payments. On the face of it, those actions would seem to violate the fiduciary responsibilities to the company US courts hold directors of companies have. (Pasko and Wander were on the board until at least 2022, when Canadian regulators took exception to there being more foreigners on the board than allowed by law. They also had a guaranteed veto until Canadian regulators said they couldn't have that, either.)
777 has a habit of being late on payments, up to and including four aircraft repossessions in March, which is not something that happens every day. You always lose on a repo, and you lose real big when you repo three shiny new 737 MAX 8s, so a lender or lessor has to be pretty fed up. That created a million dollar problem for 777 in terms of guaranteed payments under Canadian law to the people whose flights were cancelled on short notice because they didn't have the planes, and a fifty million dollar lawsuit filed by the airline, who is trying to stop the lessor from reselling the planes.
As I've said before, my read on these guys is 'shady' rather than 'dirty', but we probably won't get an answer until/unless the whole thing blows up and we find out just how hard they were leveraged, how ridiculous the interest rates were and whether they were misrepresenting their financial condition in those sales.
