Investment firm 777 Partners has agreed to take a bankruptcy loan from Leadenhall Capital Partners, turning away from its longtime financial backer Advantage Capital Holdings and aligning with a creditor that had previously accused it of fraud.

In the latest development in the bidding war between Leadenhall and A-CAP affiliate Haymarket Insurance, 777 Partners said on Friday it considered Leadenhall's $10 million in debtor-in-possession loan the superior option to fund it through bankruptcy. Leadenhall's loan includes provisions for up to $3 million more for a wind-down and will carry a zero-percent interest rate, according to court papers filed by 777.

"No commercial lender would offer these terms. Leadenhall did," a Haymarket spokesperson said on Monday. Leadenhall's relationship with the official committee of unsecured creditors also raises questions about whose interests the financing serves, the person added.

A legal representative for Leadenhall said it "has sought to ensure a fair and transparent Chapter 11 process that preserves and protects any claims that the 777 estate may have to recover value for creditors who were harmed," adding, "We look forward to supporting this process, including facilitating the estate's ability to investigate and pursue all claims."

777 had originally agreed to an $8.6 million loan from a consortium led by the A-CAP affiliate and received interim court approval to tap the funds before reversing course in favor of Leadenhall. The offer included provisions that would shield A-CAP from certain legal liabilities, Leadenhall said in court papers. Leadenhall's proposal includes no so-called releases for any involved parties, it said.

But London-based asset manager Leadenhall had also sued 777 Partners in August 2024, before the investment firm's bankruptcy, alleging the firm had double-pledged its collateral to secure loans. Leadenhall has asserted claims of up to $1.8 billion against 777, charges it has disputed. Leadenhall also sued A-CAP over related concerns.

Once a high-flying investor in European soccer clubs and low-cost airlines, 777 collapsed this year after those bets fell apart and federal fraud charges were filed against co-founder Josh Wander. A-CAP and its affiliates have provided tens of millions of dollars in funding to 777 for nearly two years, as restructuring firm GlassRatner oversaw a wind-down of its assets.

In July, a group of creditors holding a $26 million judgment forced 777 into an involuntary chapter 7 bankruptcy in Florida, where 777 is based. A month later, 777 filed for chapter 11 and the case was transferred to Dallas.

Bankruptcy Judge Edward L. Morris will decide whether to approve Leadenhall's bankruptcy loan at a hearing later this month.