Vesttoo seeks time to deliver “value-maximizing transaction”, new business plan

Vesttoo has responded to the Official Committee of Unsecured Creditors calls for its liquidation to be accelerated, stating that it has produced “a significant business plan” and that the creditors should give the insurtech the time to deliver what it believes could be a “value-maximizing transaction.”

Yesterday we reported that the Official Creditors under the Vesttoo Chapter 11 bankruptcy case had objected strongly to Vesttoo’s plan to trade forward, calling its efforts a “wasteful pursuit” that is burning money that could be returned to those harmed by the extensive letter of credit (LOC) in reinsurance fraud.

Vesttoo has responded, highlighting that under the United States Bankruptcy Code, the insurtech had been awarded the exclusive right to file a plan of reorganisation for a minimum of 120 days and stating that this is needed to ensure value creation, not the value destruction that the Creditors are claiming.

The insurtech stated, “In taking the extraordinary step of seeking to deprive Vesttoo of its statutory rights, the Official Committee of Unsecured Creditors continues to disrupt the company’s ability to restructure and create value for the benefit of all stakeholders.”

Adding that, “The Committee is ignoring strong indications of interest from within and outside the company in Vesttoo’s proven technology, solid business plan and experienced team.”

Despite the clear pressures the Israeli insurtech is under at this time on multiple fronts, Vesttoo says that, “In a short amount of time, and under impossible circumstances the Company has managed to produce a significant business plan and received positive indications from third parties for external investment in the aforementioned plan, and also received an independent opinion that indicates a significant value to the Company’s technology.”

The company notes that, while the Creditors are seeking to liquidate Vesttoo, a move which would terminate all of its remaining employees, many are currently serving in the conflict in Gaza, while others have been affected by the humanitarian tragedy that has unfolded in the region.

Ami Barlev, interim CEO of Vesttoo, commented, “Despite the Committee’s sensationalist accusations which do nothing but destroy value, we have no doubt that the creditors’ committee is not trying to maximize any value for the creditors, and in fact is performing actions that constitute complete value destruction. The Committee has not even attempted to understand the Company’s business plan, nor are they willing to provide the Company with the limited time needed to deliver a value-maximizing transaction. We have no doubt that Vesttoo’s underlying technology, infrastructure, and talent base continue to have significant embedded value that can be recapitalized to the benefit of Vesttoo’s creditors, with minimal incremental investment. Vesttoo and its professionals have been working tirelessly to deliver a business plan that leverages the Company’s strong technology and skilled team in order to recover value for all stakeholders, and multiple parties have indicated strong interest in our plan. The Company expects to shortly seek Bankruptcy Court approval to proceed with it.

“It is truly unfortunate that the Committee has prematurely filed its request despite the Company’s efforts to provide a meaningful return to these creditors. It is even more disappointing that the Committee took this public action while so many of our employees are now in the military and they and their families continue to struggle under unprecedented demands. Despite this, the Company’s dedicated employees continue to work to maximize the value of Vesttoo and will continue to do so. We are confident the court will see these efforts and grant us the ability to create and recover value for all stakeholders.

“All of these, the creditors’ committee chose to ignore, without conducting any in-depth examination, and without allowing the company even a short period of one month to bring the business plan to execution.”

Vesttoo entered Chapter 11 in the first place to find the breathing room needed to both respond to the fraud allegations, investigate them, protect itself from creditors and work on a restructuring plan as well as a strategy to move forwards.

It’s a worthwhile goal, to seek to create value out of the technology that Vesttoo has created, but the Creditors comments that the insurtech has lost the trust of the market and may struggle to generate any traction with insurance and reinsurance cedents is also valid.

Creating value from a rebranded Vesttoo will be a significant challenge and any plan that Vesttoo can come up with must clearly state how any value that can be created will be apportioned.

As, any “value-maximizing transaction” must not be for the sole benefit of the insurtech’s investors. The creditors and those still out of pocket and facing challenges due to the reinsurance letter of credit (LOC) fraud must come first when it comes to any recovery of value that can be salvaged.

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