Vesttoo: creditors should be ‘ashamed and embarrassed’ by behaviour during war
The interim chief executive officer of troubled Israeli insurtech Vesttoo has launched a broadside against creditors saying they should be “ashamed and embarrassed” by their behaviour as his country wages war.
Ami Barlev filed a document with the Bankruptcy Court for the District of Delaware, where Vesttoo has filed for Chapter 11 bankruptcy protection, saying the war with Hamas is “upending the lives of executives and employees”.
A key dispute now revolves around a period of exclusivity allowing Vesttoo (the debtors) time to prepare and propose a way forward, that would include a deal to sell the company’s pioneering technology to interested buyers.
And while the company was prepared to reduce the exclusivity period to end December 1, the creditors asked the Delaware court on October 22 to end it immediately.
The parties were before the court Thursday afternoon, via Zoom, seeking a court ruling on that issue, and also on a dispute over documents sought by the creditors in a discovery motion. The company wants the creditors’ motion seeking documents quashed.
Vesttoo fell apart in the wake of an alleged fraudulent letters of credit scandal.
Its collateralised Bermuda insurer was put into receivership, as local creditors, Aon’s White Rock Insurance (SAC), sought millions of dollars. Joint provisional liquidators were appointed by a Bermuda court.
Vesttoo’s attorneys have argued that the outbreak of war involving Israel has created a difficult environment for them to respond to “hyper-aggressive demands” by the creditors committee.
Vesttoo’s filing on Wednesday said: “Almost everyone in Israel has lost a relative, a loved one, or a friend, and many are still missing – while a number of employees have been called up to serve as reservists, meaning other employees are left to care for the house and home alone and shoulder an additional burden at work.
“This means that Israeli companies have to expect missed deadlines and turn their focus to supporting employees’ mental and physical health as the war and related attacks have traumatised the country and brought an unprecedented environment to the state of Israel.
“How has the committee reacted to this? Notwithstanding a plea from counsel that the committee show some sympathy to the debtors’ and their employees and not impose false deadlines and unnecessary pressures, the committee has demanded that the debtors immediately terminate all employees and liquidate without considering the value of or trying to sell the assets and goodwill of the debtors that were developed over a three-year period.”
Mr Barlev added: “And, in support of this, they complain that while the debtors’ employees were dealing with the unprecedented attack, attending funerals, and worrying about missing relatives and friends, the debtors were slow to respond to the committee’s request for a detailed list of employees, with a detailed description of the employees’ roles and responsibilities, and salaries and benefits for nine days in the middle of which a war broke out.”
“The debtors’ employees have demonstrated strength and determination to fulfil their commitment to their creditors and the court.
“The committee should be ashamed and embarrassed by its behaviour. The debtors merely seek three additional weeks to permit interested parties to complete their review of the asset value and to put together an offer to buy assets that can be evaluated by the parties.”
Mr Barlev said 29 of the 42 staff in Israel cannot be terminated due to the emergency situation in the country, contrary to the creditors’ demands for an immediate wind down, including because of wartime labour laws.
He said Vesttoo was still willing to work with the committee to develop a liquidating plan.
But he said: “Maintaining exclusivity will further enable the debtors to continue to work with the committee to ensure that the litigation commenced in Israel is not negatively impacted, that the debtors do not violate Israeli labour law and the debtors and their estates do not incur substantial liability for terminating people that cannot be terminated.”
• See Related Media for Ami Barlev’s full submission
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