Bermuda court to hear Vesttoo settlement application this week

The Supreme Court of Bermuda will hold a hearing in relation to the Vesttoo bankruptcy case this week, as the focus for creditors and cedents turns to receiving approval to proceed with the proposed settlement agreements under the Chapter 11 bankruptcy plan.

As we’d previously reported, the Chapter 11 bankruptcy plan of liquidation for insurtech Vesttoo was approved in the Delaware court thanks to a last minute term sheet related to the proposed settlements that have been agreed.

However, in order to take the plan forward and make it effective, the Bermuda court must sanction the Vesttoo bankruptcy settlement term sheet and plan, because issues related to property ownership of segregated cells and constructive trust, are important to the plan and settlements being followed through, due to structures used for Vesttoo reinsurance transaction being domiciled in Bermuda.

Much more on this in our previous article here.

The joint provisional liquidators (JPL’s) to the cells of the Aon White Rock SAC vehicle that were affected by the Vesttoo letter of credit (LOC) in reinsurance fraud, have already filed their application with the Bermuda Supreme Court to have the settlements approved.

This includes the JPL’s own settlement with the Official Committee of Unsecured Creditors to the Vesttoo bankruptcy, as well as the settlement agreements for individual cedents, of which there are a number.

All these settlements are key to the bankruptcy plan being made effective and cannot be effected without the Bermuda court agreeing for them to proceed in the manner envisaged, given the underlying reinsurance structures and segregated cells are domiciled there.

As a result, the Bermuda court’s approval is key and contingent to the plan being made effective and the settlements proceeding as agreed.

Now, we’ve learned a hearing has been scheduled for this week, Friday, in the Bermuda court, where for the first time this issue will be aired and feedback on it be received from the court.

At a hearing for the Chapter 11 case this week, it was said that no objections had been raised so far, although it is understood some parties may do so, hence discussions were already underway to try and get all parties comfortable.

Depending on what happens with Friday’s court hearing in Bermuda, the progress could be swift.

If the Bermuda court does not approve the settlement plans, then it could mean a return to Delaware to hear again the objections to the bankruptcy, as conformation of the bankruptcy plan was contingent on the cedent settlements going ahead.

If Bermuda does approve them, then it could be full-steam ahead to make the Vesttoo bankruptcy plan effective and move forwards with the settlements and liquidation.

There are still some objections to the bankruptcy plan, but for now it seems the focus remains on getting that Bermuda court approval, as without it there can be no further progress except for a return to the court in Delaware.

Also read our article from earlier this week, where we reported first on a new settlement agreement related to a Hannover Re longevity swap.

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