The Committee of Unsecured Creditors in the Chapter 11 bankruptcy case of insurtech Vesttoo has now filed a request with the court to allow them to conduct legal discovery on insurance and reinsurance broking group Aon and certain related entities that have been exposed to the letter of credit fraud issues.
Recently, the Committee of Unsecured Creditors received court approval to conducting legal discovery on Vesttoo and its entities, as the group seek access to documents and communications, as well as the ability to interview senior leaders of the beleaguered insurtech.
The creditor group want to quickly gain a clearer understanding of what has occurred, how the fraud was perpetrated, analyse any evidence related to their own reinsurance deals that Vesttoo facilitated, to better define any potential claims they may want to make to try and recover value linked to those deals, and importantly to understand what, if any, value may still exist and be recoverable at all.
With Aon and its Bermuda based structure White Rock having been a key intermediary and service provider to a number of Vesttto fraud-affected reinsurance deals, the creditors are now looking for access to information from the group that can assist them in their investigation.
They say, “It is evident that Aon and White Rock have relevant documents in their possession, custody, and control.
“Accordingly, the Committee seeks to conduct Rule 2004 discovery to analyze what these and other third parties knew or should have known about the fraud that was being committed and what causes of action the Debtors’ estates may have as a result.”
Going into more detail to explain, “The Committee seeks discovery from Aon and White Rock of information and documents about the structure and operation of the Cells; the conduct of Aon and White Rock in connection with the formation and management of the Cells; the fraudulent letters of credit; the knowledge of Aon and White Rock about the fraud; and related issues.
“The Document Requests… are necessary to the Committee’s investigation into claims and causes of action the Debtors’ estates may have against White Rock, Aon, and other third parties.”
The Committee said that their representatives spoke with the counsel for Aon and White Rock on October 11th, but that the lawyers were unable to state a definitive position in respect to the discovery request at that time.
However, the Committee of Creditors also noted that they have conferred with counsel for the Joint Provisional Liquidators of White Rock, who “indicated the JPLs are unopposed to the relief sought.”
That might suggest Aon will not be opposed either, but without confirmation it’s impossible to tell.
The list of documentation sought for the legal discovery is extensive and includes the information related to the segregated cells exposed to the Vesttoo fraud, the business plans of cells involved, communications with the banks providing letters of credit (LOCs), and agreements with the supposed investors backing the collateralized reinsurance arrangements, amongst others, but also all communications related to “any red flags, irregularities, suspicions, inconsistencies, or other concerns related to Vesttoo Business”.
It’s interesting that the Committee of Creditors also note a desire to perform discovery on “other third parties” as well, although not naming any at this stage.
There are other parties and structures involved that will already be handing over documentation via the discovery being undertaken on Vesttoo, but it seems the creditor committee perhaps has ambitions to access as much related information as possible, to help them in finding out what, if any funds and premiums paid for reinsurance that has been affected by the fraud may be recoverable.
Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.