Israeli insurtech Vesttoo has requested that the New York court deny Aon’s White Rock Insurance (SAC) Ltd.’s request for a preliminary injunction to freeze its assets, stating that this would ultimately destroy its business by “ending its ability to operate.”
Last week, White Rock sought an injunction freezing the assets of Vesttoo following the allegations of fraudulent letters of credit (LOC) provided by the insurtech to collateralize reinsurance transactions.
Court documents showed that the U.S. court issued a temporary restraining order to freeze the company’s assets except for funds in the amount of $1 million necessary to pay employees, taxes, and existing subcontractors and suppliers essential to Vesttoo’s ordinary course operations.
Vesttoo has now responded, filing a memorandum of law in opposition to White Rock’s petition for injunctive relief, while interim Chief Executive Officer (CEO), Ami Barlev, has also filed a declaration supporting Vesttoo’s argument.
The Vesttoo submission states that White Rock is seeking the preliminary injunction based on “mere conjecture and speculation,” adding that if compelled, it “hamstrings Vesttoo and destroys its business by ending its ability to operate.”
In his supporting deceleration, Barlev states that the company’s weekly expenses are $360,000, and warns that limiting Vesttoo’s access to $1 million from its global accounts, “is insufficient for Vesttoo’s continued operations and would be catastrophic for the Company.”
“Vesttoo’s ongoing efforts to sustain the viable operations of its business are already being hindered by the order that appears to restrain Vesttoo’s ability to access all of its assets,” continues the declaration.
Adding that were the New York court to grant the petition and encumber the firm’s assets, it would be “forced to cease virtually all operations.”
The opposing memorandum of law filed by Vesttoo argues that White Rock has failed to meet its “high burden of showing that it will suffer irreparable harm absent the injunction.”
Further, Vesttoo states that White Rock has “not made its prima facie showing that there is a likelihood of success on the merits of any claims underpinning its Petition.”
For these reasons and others outlined in the document seen by Reinsurance News, Vesttoo has called for the court to deny White Rock’s request.
Vesttoo highlights that in order to satisfy the element of irreparable harm, White Rock must provide evidence that Vesttoo is dissipating assets, or is likely to try and do this given past and current conduct.
“White Rock has failed to provide any evidence of such activities. Instead, White Rock asks the Court to assume or speculate about Vesttoo based on news articles that provide no detail about Vesttoo’s financial situation,” states the document.
The document goes on to say that just because alleged fraudulent LOCs were issued previously, White Rock is wrong to argue that the court can assume new and current management will conceal or dissipate assets.
“However, the alleged past wrongdoing was not concealing or dissipating funds, and there is no support for the allegation that current management will conceal or dissipate funds,” reads the document.
Barlev also comments on this matter, saying that the insurtech has no intention to transfer any funds form its global accounts, with all decisions regarding material costs to be made with the approval of new leadership.
“Vesttoo has no current intention of transferring assets from the United States to its foreign accounts except for those necessary to pay business expenses in the ordinary course,” states Barlev.
The interim CEO’s deceleration concludes that “Vesttoo is currently exploring all available options and alternatives with respect to its creditors.”
The Vesttoo court document highlights additional reasons why it feels White Rock’s irreparable harm argument fails, while also claiming that White Rock has not provided either facts or law to support that it will be successful on its breach of contract or rescission claims.
