Insurtech Vesttoo has now filed for Chapter 11 bankruptcy protection in the U.S., as it looks to protect its assets and aggressively pursue legal action against all parties responsible for the fraudulent letter of credit (LOC) saga.
Yesterday, the company announced that along with its subsidiaries, it has commenced Chapter 11 proceedings in the U.S. Court for the District of Delaware.
Vesttoo explains that with the protection this offers, its platform and current capital structure remain both stable and fully sustainable. The insurtech goes on to note that despite these proceedings, its Board of Directors does not plan to liquidate the company, but intends to emerge from it a stronger partner in the years ahead.
Ami Barlev, Vesttoo’s interim Chief Executive Officer (CEO), said: “We believe the steps we are taking are best for Vesttoo’s long-term growth and success. Not only will they result in a strong, more sustainable capital structure, but they will provide us with the platform to aggressively pursue all parties that harmed our business.
“We fully believe that Vesttoo’s unique core technology and experienced team, coupled with the needs of the market, constitute a strong base for rebuilding the company better and stronger than before.”
The company feels that following allegations that fraudulent LOCs were used on its platform, Chapter 11 was “necessary to protect Vesttoo’s assets and serve as a forum to pursue legal action against those responsible for the company’s current situation.”
Ultimately, the under fire insurtech believes that this will enable it to develop its business plan moving forward under its Board of Directors, while providing Vesttoo with protection from its creditors, strengthen its business and facilitate its restructuring plan, all while maintaining normal business operations.
In a statement last week, Vesttoo’s interim CEO said that the firm had discovered that numerous external factors caused the issue, and that it had initiated immediate changes as a result of an investigation.
Currently, it remains unclear exactly what has occurred and who is responsible for the alleged fraud.
