Vesttoo hits back at creditors’ committee

Embattled insurtech Vesttoo has hit back at a bid by creditors of the company to stop it from moving forward with growing its business.

The official committee of unsecured creditors in the Chapter 11 proceedings of Vesttoo moved last this week to terminate Vesttoo’s plan of reorganisation, describing Vesttoo as the “Madoff” of insurers.

Describing the move as an “extraordinary step”, Vesttoo said the committee was disrupting “the company’s ability to restructure and create value for the benefit of all stakeholders”.

“The committee is ignoring strong indications of interest from within and outside the company in Vesttoo’s proven technology, solid business plan and experienced team,” the company said.

“The committee made clear its desire to immediately liquidate Vesttoo and terminate all of its employees, the majority of whom are currently in Israel under unthinkable conditions and many of whom are currently serving in the conflict in Gaza, and at a time when many employees in the market are in great mourning in light of the murderous terrorist attack, in which hundreds of innocent people were murdered, many of them children.”

Vesttoo said that under “impossible circumstances”, the company had produced a business plan and had received “positive indications” from third parties for external investment.  It said it had also received an independent opinion that indicates a significant value to the company's technology.

Ami Barlev, Vesttoo’s interim CEO said: “Despite the Committee’s sensationalist accusations which do nothing but destroy value, we have no doubt that the creditors' committee is not trying to maximise any value for the creditors, and in fact is performing actions that constitute complete value destruction.

“The Committee has not even attempted to understand the Company’s business plan, nor are they willing to provide the Company with the limited time needed to deliver a value-maximising transaction,” Barlev said.

“We have no doubt that Vesttoo's underlying technology, infrastructure, and talent base continue to have significant embedded value that can be recapitalised to the benefit of Vesttoo’s creditors, with minimal incremental investment.

“Vesttoo and its professionals have been working tirelessly to deliver a business plan that leverages the Company’s strong technology and skilled team in order to recover value for all stakeholders, and multiple parties have indicated strong interest in our plan. The Company expects to shortly seek Bankruptcy Court approval to proceed with it."

Barlev added: “It is truly unfortunate that the Committee has prematurely filed its request despite the Company’s efforts to provide a meaningful return to these creditors. It is even more disappointing that the Committee took this public action while so many of our employees are now in the military and they and their families continue to struggle under unprecedented demands.

“Despite this, the Company’s dedicated employees continue to work to maximise the value of Vesttoo and will continue to do so. We are confident the court will see these efforts and grant us the ability to create and recover value for all stakeholders.”

Vesttoo said it expects to file a response to the committee’s motion and expects the Bankruptcy Court to rule in November. The committee’s filings do not impact Vesttoo’s management and operation of its business under the direction of its board of directors.

Vesttoo entered Chapter 11 bankruptcy proceedings after Aon-backed company White Rock bid to freeze its assets. The Bermuda Monetary Authority had earlier succeeded in putting Vesttoo’s Bermuda based collateralised reinsurer into liquidation.

It has since been alleged that two of the founders of Vesttoo, with other staff, executed fraudulent letters of credit to secure investments for insurance linked securities.

The creditors committee filed to block the reorganisation plan, saying: ““Vesttoo – viewed as the Madoff of insurance – never operated as a business or as a going concern without revenue from the fraud.

“Like Bernie Madoff among investors, the trust Vesttoo once had with cedents evaporated upon the revelation of the fraud that Vesttoo’s former CEO, CFE, senior director of capital markets, and others perpetrated on insurance companies, and that trust will never be recovered. No reputable insurance company can afford the risk of doing business again with Vesttoo, regardless of the company’s new brand name.”

It added: “The Committee files this Motion to stop the debtors from continuing their wasteful pursuit of a dead-on-arrival reorganisation or going concern “Trade Forward” strategy that has depleted the debtors’ available cash rapidly to a shocking degree,” the filing states.