Court rules Vesttoo can’t make compensation payments to fired staff
Court rules Vesttoo can’t make compensation payments to fired staff
Vesttoo, which laid off around 75% of its workforce last month, received approval to make payments of over $2.78 million to its remaining employees, but was told it currently can’t spend an additional $2.2 million related to compensation payments
Vesttoo can continue to pay the salaries, benefits and expenses of its employees, but is currently not allowed to make any compensation payments, a Delaware court has ruled as part of the company’s Chapter 11 proceedings.
Vesttoo, which laid off around 75% of its workforce last month, received approval to make payments of over $2.78 million, but was told it currently can’t spend an additional $2.2 million related to compensation payments.
Due to the bankruptcy proceedings, the Israeli fintech company needs to receive approval from the court to make any payments. The judge determined that Vesttoo needs to provide more evidence to support paying fired staff, despite Vesttoo’s lawyer explaining that compensation is required under Israeli law.
In an updated statement to the court, interim CEO Ami Barlev said that CEO Yaniv Bertele and CPO Alon Lifshitz, who were both removed from their positions by the Board, would not receive any payments. However, that wasn’t enough to convince the court to release funds required to pay fired staff.
Last week, Barlev said that Vesttoo’s revenue reached $110 million in 2022. Barlev also stated that Vesttoo's EBIDTA in 2022 was estimated at around $60 million.
According to Barlev, the company was planning on embarking on a funding round at a $1.5-2 billion valuation prior to the outbreak of the fraud scandal.
Vesttoo provides insurers with access to so-called insurance-linked securities - an alternative form of reinsurance. These securities may be backed by collateral in the form of letters of credit.
The company has conducted internal and external analysis of events leading up to the first report of a fraudulent letter of credit that was used in many transactions. Led by Mouro, Vesttoo last raised $80 million at a $1 billion valuation last October.
