Vesttoo case mediation completed with “several” settlements said reached

The recent mediation between parties involved in the Vesttoo Chapter 11 bankruptcy proceedings has now been completed and a report from the mediator says that “several” settlement agreements have been reached, while negotiations are ongoing with other parties.

As we had reported, the creditors in Vesttoo’s Chapter 11 bankruptcy case entered into mediation in an attempt to solve a key sticking point over the consolidation of the estate, versus honouring the segregation of cell structures used for reinsurance transactions affected by fraudulent letters of credit (LOCs).

Then last week we reported that the Official Committee of Unsecured Creditors in the Vesttoo bankruptcy case had reached a proposed settlement with fronting specialist Clear Blue Insurance, which saw an agreement reached on the proposed bankruptcy plan and in relation to funds held in one of the debtor vehicles, Vesttoo Bay XIV Limited.

But it now turns out that more settlement agreements have been reached, which have not yet been publicly disclosed, suggesting the mediation process did result in more progress for the parties involved which could help to push forwards the rest of the bankruptcy process and perhaps even drive more agreement on the proposed plan of liquidation.

The mediation was facilitated by former Delaware bankruptcy court judge Christopher S. Sontchi and took place at the New York office of law firm Greenberg Traurig, LLP.

In reporting on the mediation, Sontchi said that an in-person mediation took place on three consecutive days, after which he also held numerous follow-up calls with the parties involved, with all participating in the process in good faith.

Sontchi said that he understands some of the parties are “engaged in settlement negotiations” now without his participation and are “sincerely attempting to reach a settlement.”

While, “As a result of the mediation and ongoing settlement negotiations several settlements were reached.”

Of which we know of just the one, between the Official Committee of Unsecured Creditors and Clear Blue Insurance, so this report from the mediator suggests there may be more to come.

It remains to be seen whether the issues can be overcome, but this does seem a positive sign for the case to at least start moving forwards again.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.