Bermuda case on Vesttoo fraud-affected cells adjourned to Dec 1st

A Bermuda Supreme Court hearing held on Friday, to look into the issue of segregated cells that housed reinsurance deals affected by the Vesttoo letter of credit (LOC) fraud and fake collateral issues, resulted in an adjournment of the case until December 1st, the Royal Gazette has reported.

Local Bermuda newspaper the Royal Gazette reported that the hearing went ahead despite concerns that the cyber attack on Bermuda government systems might have affected it.

Bermuda’s government tech systems are now recovering from the cyber attack, but it was raised as a topic during Friday’s Supreme Court hearing, the Gazette explained.

According to the news report, the counsel for financial regulator the Bermuda Monetary Authority (BMA) requested an adjournment in the matter of White Rock Insurance, to allow for the completion of a liquidator’s report.

Chief Justice Narinder Hargun then offered a resumption date for the case of December 1st.

Teneo, the company appointed as the joint provisional liquidators (JPLs) to the White Rock Insurance (SAC) Limited cells, is reported to be planning to have a report on the liquidation completed by October 18th.

As we’ve been covering, the segregated cells of the Aon White Rock SAC vehicle that have been affected by the fraud issues are the subject matter of this Bermuda court case, which is ongoing in parallel to the US Chapter 11 bankruptcy case.

Parties in both cases are seeking visibility of what assets might remain in vehicles that housed collateralized reinsurance deals facilitated by or involving Vesttoo, where the letter of credit collateral was found to be invalid and forged.

The Bermuda action was well-attended, with counsel for the BMA, Vesttoo, Chaucer and White Rock present as well as the liquidators and other interested parties.

Questions were reportedly raised over sealed records and the threat of contempt of court in Delaware. As we’ve reported, the difference of opinion over ownership or control of property rights to segregated cells and accounts linked to them, that were used for reinsurance deals facilitated by Vesttoo, seems to be the key sticking point at this time.

In addition, the desire to perform legal discovery on Vesttoo and the structures involved in its reinsurance deal also hangs over both cases, with the latest in the US bankruptcy court being the committee of unsecured creditors putting forward a proposed order to allow it to commence discovery.

Perhaps the most notable happening in the Bermuda court hearing was the counsel for Lloyd’s specialist re/insurer Chaucer agreeing to the adjournment, but at the same time requesting that “no further hearings related to the matter” take place before December 1st, the Royal Gazette reported.

Chaucer is a company that is exposed to the fraud, with a collateralized quota share casualty arrangement that was said to have been affected by invalid LOC collateral.

Despite this though, Chaucer has not yet joined the Committee of Unsecured Creditors, or joined the Chapter 11 bankruptcy proceedings, it seems.

There is a Delaware bankruptcy court hearing today, to discuss a range of items related to the case and at which the topic of legal discovery and who should be allowed to undertake it, plus the control of or access to segregated cells, may all surface again.

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