Israeli InsurTech Vesttoo has requested more time from the creditors in their Chapter 11 bankruptcy case, as it still believes it can produce a “value-maximising transaction”.
The firm has remained under fire, following its alleged involvement in a scandal over a fraudulent letter of credit used as collateral in a transaction with an insurer, and has now received the exclusive right to file a plan of reorganisation for a minimum of 120 days, under the United States Bankruptcy Code.
However, the Tel-Aviv based firm has hit out at the Official Committee of Unsecured Creditors in a recent statement, claiming that the organisation is “seeking to deprive Vesttoo of its statutory rights”.
According to the release, the Committee is ignoring strong indications of interest from within and outside the company in Vesttoo’s business plan, and proven technology, making it clear that it has a desire to liquidate the InsurTech.
Ami Barlev, Vesttoo’s interim CEO, launched into a scathing criticism of the Committee, he said, “Despite the Committee’s sensationalist accusations which do nothing but destroy value, we have no doubt that the creditors’ committee is not trying to maximise 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-maximising 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.
He added, “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 maximise 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 expects to file a response to the Committee’s motion and expects the Bankruptcy Court to rule in November. The Committee’s filings do not impact Vesttoo’s management and operation of its business under the direction of its Board of Directors.
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