Insurtech Vesttoo’s move to commence Chapter 11 bankruptcy protection in the U.S. has, for now, stopped the legal action against it from Aon’s White Rock Insurance (SAC) Ltd. from proceeding, while the temporary restraining order to freeze its assets has been vacated.
In court yesterday, counsel for White Rock, which is pursuing Vesttoo as it seeks the return of funds linked to alleged fraudulent letters of credit (LOCs) used to facilitate reinsurance transactions, argued that although Vesttoo has filed for bankruptcy, not all of the insurtech’s subsidiaries were covered by this.
Specifically, White Rock’s lawyers highlighted Vesttoo RT SPV LLC in Delaware, and argued that as this Vesttoo entity is missing from the Chapter 11 filings, the case should be continued.
The lawyers said: “Petitioner respectfully requests that this Court permit Petitioner to proceed with the expedited discovery previously granted by this Court’s Order to Show Cause (ECF No. 27) against Respondent Vesttoo RT SPV LLC and any other Vesttoo entities that have not sought relief under chapter 11. In particular, Petitioner respectfully requests that it be permitted to take the depositions of the former Vesttoo employees identified in this Court’s Order to Show Cause.
“Expedited discovery is necessary to allow White Rock to adduce evidence and better understand the facts concerning what appears to be a massive fraudulent scheme and to take steps as expeditiously as possible to pursue complicit patties.”
However, it transpired that this subsidiary of Vesttoo was in fact inactive, which meant that all of the insurtech’s entities were deemed to have fallen into bankruptcy.
As a result, during yesterday’s New York hearing, the judge accordingly vacated the temporary restraining order designed to freeze Vesttoo’s assets and placed the case on its suspense docket.
The judge confirmed that the court will retain jurisdiction over the case in the event than any Vesttoo entities emerge from bankruptcy and White Rock renews its application for preliminary relief.
For now, at least, it appears that the legal action from Aon’s White Rock has been halted as a result of the insurtech filing for bankruptcy.
As we reported previously, White Rock is seeking the return of $136.7 million in collateral that the segregated accounts and transformer structure distributed to Vesttoo.
