Creditors demand to liquidate Vesttoo and halt any attempt to reorganize the company
Creditors demand to liquidate Vesttoo and halt any attempt to reorganize the company
“Vesttoo – viewed as the Madoff of insurance – never operated as a business or as a going concern without revenue from the fraud,” read a statement by the Official Committee of Unsecured Creditors in the Vesttoo bankruptcy case
The Official Committee of Unsecured Creditors in the Vesttoo bankruptcy case has voiced its strong objection to the insurtech startup’s plans to reorganize the company and return to activity following the letter of credit (LOC) fraud scandal.
“Vesttoo – viewed as the Madoff of insurance – never operated as a business or as a going concern without revenue from the fraud,” the Committee wrote in an official filing.
“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.”
The board of Vesttoo filed its first interim report in the United States Bankruptcy Court for the District of Delaware last month and said that its investigation identified that “pervasive and systemic misconduct” was engaged in by a limited set of Vesttoo executives and other third-parties outside of Vesttoo. According to the report, this misconduct was shielded from the majority of Vesttoo’s employees, the Board of Directors and the insurance markets. “Among the critical findings from the investigation are that a number of former Vesttoo executives, namely Yaniv Bertele, Alon Lifshitz, Udi Ginati and Josh Rurka were directly involved in creating fake documents and forging identities,” read the report prepared by financial and risk advisory firm Kroll.
The creditors' committee insisted that any attempt to rebrand would be a waste of money that could be recovered by its creditors.
“The Committee files this Motion to stop the Debtors from continuing their wasteful pursuit of a dead-on-arrival reorganization or going concern “Trade Forward” strategy that has depleted the Debtors’ available cash rapidly to a shocking degree,” the filing states.
Ami Barlev, Vesttoo’s interim CEO commented that “despite the Committee’s sensationalist accusations which do nothing but destroy value, we have no doubt that the creditors' committee is not trying to maximize 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-maximizing transaction. We have no doubt that Vesttoo's underlying technology, infrastructure, and talent base continue to have significant embedded value that can be recapitalized to the benefit of Vesttoo’s creditors, with minimal incremental investment.”
Vesttoo explained in its response that under the United States Bankruptcy Code, the company was awarded the exclusive right to file a plan of reorganization for a minimum of 120 days. The company also noted that the Committee wants to 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.
“Despite this, in a short amount of time, and under impossible circumstances the Company has managed to produce a significant business plan and received positive indications from third parties for external investment in the aforementioned plan, and also received an independent opinion that indicates a significant value to the Company's technology.
“Vesttoo 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’s statement concluded.
