Vesttoo creditors claims reach $4.8 billion, but less than $100 million likely to be recovered

The bankruptcy court in Delaware conditionally sanctioned last week the reorganization plan under Chapter 11 for Vesttoo's bankruptcy, but according to industry website Artemis, it seems likely the creditors will only ultimately receive a miniscule portion of their claims

Creditors involved in the bankruptcy proceedings of Israeli insurtech firm Vesttoo have submitted claims surpassing $4.8 billion against the company and its affiliated entities. However, the anticipated amount recovered is expected to be less than $100 million, according to industry website Artemis. The report suggests that a sum between $77 million and $88 million is available for disbursement to general unsecured creditors. Further recuperation, contingent on favorable litigation outcomes, is estimated to fall within the range of $6 million to $48 million.
The United States Bankruptcy Court for the District of Delaware conditionally sanctioned last week the reorganization plan under Chapter 11 for Vesttoo's bankruptcy, setting the stage for a vote on the matter, which seems likely to be approved, as the main creditors are backing it.
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וסטו Vesttoo
וסטו Vesttoo
(Photo: Business Insurance)
Allegedly, former senior employees at Vesttoo illicitly generated nearly $3.36 billion in letters of credit (LOC) for reinsurance transactions.
The board of Vesttoo, led by interim CEO Ami Barlev, is still hopeful of resurrecting the company in order to find a buyer for its technology and team.
In its first interim report filed with the Delaware court two months ago, Vesttoo said that its investigation identified that “pervasive and systemic misconduct” was engaged in by a limited set of Vesttoo executives and other third-parties outside of Vesttoo. According to the report, this misconduct was shielded from the majority of Vesttoo’s employees, the Board of Directors and the insurance markets. “Among the critical findings from the investigation are that a number of former Vesttoo executives, namely Yaniv Bertele, Alon Lifshitz, Udi Ginati and Josh Rurka were directly involved in creating fake documents and forging identities,” read the report prepared by financial and risk advisory firm Kroll.
The creditors' committee insisted at the time that any attempt to rebrand would be a waste of money that could be recovered by creditors.