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In a 22 October 2023 filing with the US Bankruptcy Court for the District of Delaware, the Official Committee of Unsecured Creditors (Committee) appointed in In re: Vesttoo Ltd. submitted a Motion for “Entry of an Order Terminating Exclusive Periods for Debtors to Propose and Solicit Acceptances of a Plan”.
In its filing, the Committee put forth a scathing assessment of Vesttoo (the Debtors), outlining why the Court should terminate the Debtors’ Exclusive Periods and permit the Committee to file a liquidation plan and timely exit from the chapter 11 cases. The Committee states it is seeking “to stop the Debtors from continuing their wasteful pursuit of a dead-on-arrival reorganization or going concern ‘Trade Forward’ strategy that has depleted the Debtors’ available cash rapidly to a shocking degree”, contending that “the Debtors have no ongoing business and have not generated any revenue since filing these cases”.
The Committee went on to invoke the name of disgraced investor Bernie Madoff in its critique of how Vesttoo functioned: “Vesttoo – viewed as the Madoff of insurance – never operated as a business or as a going concern without revenue from the fraud. … Vesttoo, from inception, relied on fraudulent letters of credit and standby letters of credit … in nearly all reinsurance transactions during their roughly five years of operations. … Not surprisingly, the Vesttoo brand is now toxic in the industry and cannot be rehabilitated.”
While the Committee admits that early termination of exclusivity is uncommon, the Committee contends it is warranted in this instance. “Unlike typical debtors in large chapter 11 cases that have multiple constituencies … these cases would be simple and efficient because the Committee’s constituency, the Debtors’ unsecured creditors, are the only viable beneficiaries of a restructuring”. The Committee continued: “Because the Debtors have lost all credibility with their only material constituency – the worldwide reinsurance markets – maintaining exclusivity serves no purpose. To prevent the Debtors from further squandering the estates’ precious resources, the Committee should be permitted to file, solicit, and confirm a plan.”