Vesttoo Ltd, the scandal-plagued Israeli insurtech that has scrambled to stay ahead of a stormy summer, has now collapsed into Chapter 11, still vowing to stay alive.

The latest development comes less than a week after the announcement of a liquidation of the company’s collateralised insurer in Bermuda.

That decision came as an about turn, only days after the Bermuda office was listed among the five that would remain open, at a time the company was overnight closing offices and slashing their workforce from 200 to 50.

But the new moves come as reinsurance broker Aon’s White Rock SAC, a major client of the company, submitted a request to the Tel Aviv District Court yesterday to freeze Vesttoo’s assets in all banks, insurance companies and investment houses in Israel, it has been reported.

Calcalist’s CTech also reported that if the request is approved, it would lead to a temporary freeze of all the company's assets in Israel, up to about $135 million.

Vesttoo already had all its assets, including bank accounts, in the US frozen by a New York court last week after a request filed by White Rock.

A hearing was scheduled there for today.

However, as the company now seeks breathing room and protection from creditors, it has reflected on its recent troubled past, confident that it still had a future.

Last night, a company statement said that Vesttoo Ltd and its subsidiaries had commenced Chapter 11 proceedings in the United States Court for the District of Delaware.

It said that with the protection of Chapter 11, the company’s platform and current capital structure remained stable and fully sustainable and that the Vesttoo board of directors had confirmed it did not intend liquidating the company as a result of the proceedings.

The statement said the board intended to emerge from this process a stronger partner to all stakeholders, including employees, customers and vendors.

Ami Barlev, Vesttoo’s interim 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.“

Mr Barlev, a company founder and board member, took over the running of the company last week.

He added: “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 also said that in light of the various allegations related to the fraudulent letters of credit used on Vesttoo’s platform, the company determined that 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.

Vesttoo said this would allow the development of its business plan moving forward under the company’s board of directors.

The statement added: “Furthermore, it will provide the company with protection from its creditors, strengthen its business and facilitate its restructuring plan while maintaining normal business operations.”

Things have been anything but normal for some weeks.

The company began as a marketplace, using technology, data science expertise, finance and risk transfer to diversify investment opportunities and provide new sources of insurance capacity.

Vesttoo continues ongoing inquiries into the events leading up to the first report of a fraudulent Letter of Credit that began its incredible downward spiral.

The company is being advised through this process by an experienced global risk, audit and compliance expert and external lawyers.

Yaniv Bertele, Vesttoo’s recently installed CEO and Alon Lifshitz, the chief financial engineer, were sidelined from their roles at the company earlier in the month and put on paid leave.