In a recent filing to the U.S. bankruptcy court, insurtech Vesttoo has said that joint action launched in the Supreme Court of Bermuda by the Bermuda Monetary Authority (BMA) and Aon’s White Rock (SAC) Ltd. last week, violates the automatic stay under its Chapter 11 cases.
On Friday, the BMA and White Rock Bermuda commenced action in court to pursue maximum recovery for re/insureds impacted by the alleged fraud linked to Vesttoo reinsurance deals.
The action applies solely to the impacted Vesttoo cells, and therefore has no effect on any other cells or White Rock Bermuda clients.
Following the BMA’s confirmation of the joint action, Vesttoo’s interim CEO Ami Barlev filed a declaration with the U.S. bankruptcy court in support of the company’s Chapter 11 petitions and first day pleadings.
The filing states that the BMA and White Rock jointly agreed to pursue the action in the Bermuda court “notwithstanding these Chapter 11 Cases,” adding that their lawyers “had been informed that such action would violate the automatic stay”.
For context, an automatic stay is a provision in U.S. bankruptcy law that temporarily prevents creditors, collection agencies, government entities, and others from pursuing debtors for money that they are owed. An automatic stay is essentially an injunction stopping creditors (White Rock) from starting or continuing to take action against a debtor (Vesttoo) or its property.
Vesttoo filed for Chapter 11 bankruptcy protection in the U.S last week. Prior to this, it was revealed that Aon’s White Rock demanded the return of $136.7 million in collateral that it had distributed to Vesttoo.
