Vesttoo creditors try mediation to solve consolidation vs segregation dispute
The creditors in the Chapter 11 bankruptcy case of insurtech Vesttoo are now trying mediation out, as a way to solve the 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).
As we’ve covered at length, the topic of ownership of segregated cells and their contents, which has spilled over into a dispute over a consolidation approach to the bankruptcy estate and its disbursement, over honouring reinsurance transaction related segregation, is now the key focus among creditors.
Some side with the proposed bankruptcy plan, that sought to liquidate at pace and disburse assets rapidly, while others are determined to retain what they see as their sole rights to specific transaction structures and any value in or linked to them.
Most recently, Chaucer expressed its issue with the bankruptcy plan that had been approved by the Official Committee of Unsecured Creditors to the Vesttoo case, while the Joint Provisional Liquidators (JPLs) joined with some of its arguments, also pointing to the desire to follow the segregated approach to liquidation and disbursements.
Unable to find a way forwards between all the various creditor parties, the judge appointed by the Delaware bankruptcy court has now sent them all to mediation, to attempt to find common ground, or at least an agreement to move forwards with the bankruptcy case process.
The judge has ordered that “all matters related to the Combined Disclosure Statement and Plan” and the objections to it, that were due to be discussed at a hearing on February 22nd, now be moved to mediation.
The mediation commenced on Feb 6th, we understand, and the following parties all agreed to participate, Vesttoo as debtors, the Committee of Creditors, Chaucer, Aon / White Rock, and the the Joint Provisional Liquidators.
The mediation process can continue for as long as parties find it useful or necessary.
It will be interesting to see whether such a process can assist with moving the bankruptcy process along.
Finally, we may get some agreement on the topic that has been an undercurrent to this case for months now, over “ownership” of cells or structures used for Vesttoo’s reinsurance deals and the value within or linked to them.
Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.
