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Vesttoo wins bankruptcy breathing room, holds staff blameless

US District Court for the Southern District of New York has unfrozen Vesttoo’s assets and allowed it to proceed into Chapter 11

Inquiries into fraudulent letters of credit used in collateral for business with the insurtech, Vesttoo, have made enough progress, the company said, that they have determined there was no internal fraud.

The statement came after courts in New York and Tel Aviv removed temporary restraining orders on the company’s accounts, allowing it to proceed into Chapter 11.

The restraining orders had come from US District Judge Paul A. Engelmayer, for the Southern District of New York, at the request of reinsurance broker Aon’s White Rock SAC, a major client of the company.

It had included a submission from White Rock to the Tel Aviv District Court to freeze Vesttoo’s assets in all banks, insurance companies and investment houses in Israel.

Vesttoo released a statement yesterday: “Vesttoo can confirm that the federal court in New York has removed the temporary restraining order freezing the company’s accounts on August 15, and the Aon White Rock legal case was placed on the court’s suspense docket.

“The courts in Israel have followed suit, removing the temporary restraining order from the company’s accounts in Israel, as well. The proceedings moving forward will fall under Chapter 11, which is aimed at providing the company with the ability to restructure the business and rebuild while pursuing legal action.

"We can also confirm that the investigation into the fraudulent LOCs used as collateral in the company’s transactions is in advanced stages, and the company hopes to be able to publish results in the near future.

“What we can already confirm is that the source of the fraud is external to Vesttoo and no employees of Vesttoo UK, US, Bermuda, Japan, or other jurisdictions outside of Israel are under any suspicion of being involved in the fraudulent activities.

“We can firmly assure that Vesttoo’s remaining core team of professionals is free of any suspicion and our company continues to operate because of these talented individuals."

An in-depth inquiry carried out by top forensic investigators, together with an international law firm engaged by Vesttoo’s independent ad hoc committee, has been under way for weeks. The board threatened legal action against anyone who was deemed to have hurt the company.

Before the New York court this week, White Rock pressed for expedited discovery to allow them to “adduce evidence and better understand the facts concerning what appears to be a massive fraudulent scheme and to take steps as expeditiously as possible to pursue complicit parties”.

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Published August 17, 2023 at 7:59 am (Updated August 17, 2023 at 7:59 am)

Vesttoo wins bankruptcy breathing room, holds staff blameless

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