Beleaguered Vesttoo regains control of assets thanks to bankruptcy filing
The temporary restraining order preventing the Israeli startup from accessing its assets in the U.S. was lifted after it filed for Chapter 11 bankruptcy protection in a U.S. court a day earlier
The temporary restraining order preventing Israel-based fintech Vesttoo from accessing its assets in the U.S. was lifted on Tuesday after a New York court ruled to suspend Aon White Rock’s legal case due to the former’s bankruptcy filing.
Check out all Vesttoo related articles
Vesttoo filed for Chapter 11 bankruptcy protection in a U.S. court on Monday, which will enable it to pursue legal action against those responsible for a fake collateral scandal.
Vesttoo - partly backed by Banco Santander's fintech venture capital arm Mouro Capital - has laid off staff, closed offices and appointed an interim chief executive following the discovery of fraudulent letters of credit used on its platform.
"We believe the steps we are taking are best for Vesttoo’s long-term growth and success," interim CEO Ami Barlev said in a statement.
"Not only will they result in a strong, more sustainable capital structure, but they will provide us with the platform to aggressively pursue all parties that harmed our business."
Related articles:
Vesttoo had all its assets, including bank accounts, in the U.S. frozen by a New York court last week following a request filed by White Rock.
White Rock demanded the injunction due to what it claimed was an “apparent large-scale fraud scheme surrounding letters of credit provided by Vesttoo to collateralize reinsurance transactions facilitated by White Rock on behalf of its insurer clients.”
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.
In its bankruptcy filing, Vesttoo said it had appointed law firm DLA Piper and financial adviser Kroll to represent the firm.
Reuters contributed to this report
