Responding to a request from the Official Committee of Unsecured Creditors to speed up the liquidation, Bestow said it had prepared a “significant business plan” and argued creditors should give the insurtech company time to execute what they believe would be a “value-maximizing transaction.”
Vestor responded by stressing that under U.S. bankruptcy law, the insurtech company had been given the exclusive right to file a reorganization plan within a minimum of 120 days, which it said was necessary to ensure value creation, not value destruction, as creditors claim.
“By taking the extraordinary step of seeking to strip Vesttoo of its statutory rights, the Committee of Unsecured Creditors continues to impede the company's ability to restructure and create value for the benefit of all stakeholders,” the insurtech company said in a statement.
It added: “The committee has ignored strong expressions of interest, both internal and external, in Best2's proven technology, solid business plan and experienced team.”
Despite the obvious pressures Israeli insurtech companies are currently facing on multiple fronts, Bestor said, “In a short period of time and under seemingly impossible circumstances, we have developed a significant business plan, received positive indications from third parties regarding external investment in said plan, and also received an independent opinion indicating the significant value of our technology.”
The company said its creditors were seeking to liquidate Vestor, which would result in the dismissal of all of its remaining employees, many of whom are currently serving in the Gaza conflict and some of whom have been affected by the humanitarian tragedies unfolding in the region.
Vestor's Interim CEO, Ami Bar-Lev, commented: “While the Creditors' Committee's sensational accusations will only destroy value, we believe the Creditors' Committee is not attempting to maximize any value for creditors and is, in fact, engaging in conduct that amounts to outright value destruction. The Committee has not even attempted to understand the Company's business plan, nor is it willing to give the Company the limited time it needs to execute a value-maximizing transaction. There remains significant value embedded in Vestor's underlying technology, infrastructure and talent base, and we remain confident that we can recapitalize for the benefit of Vestor's creditors with minimal additional investment. Vestor and its professionals are working tirelessly to execute a business plan that leverages the Company's strong technology and skilled team to restore value for all stakeholders, and multiple parties have expressed strong interest in our plan. We expect to move forward with our plan shortly with Bankruptcy Court approval.”
“It is truly disappointing that the Committee filed its request prematurely, given the Company's efforts to return meaningful benefits to its creditors. It is even more disappointing that the Committee took this public action at a time when many of our employees are currently enlisted in the military and they and their families continue to suffer unprecedented demands. Nonetheless, our dedicated employees have continued to work to maximize the value of Besto and will continue to do so. We are confident that the Court will recognize these efforts and provide us with the ability to create and recover value for all our stakeholders.”
“The committee of creditors has chosen to ignore all this without conducting a detailed investigation or even giving the company a short period of one month to implement its business plan.”
Besto originally filed for Chapter 11 bankruptcy protection to find the space it needed to respond to and investigate fraud allegations, protect itself from creditors, and work on a restructuring plan and moving forward strategy.
While trying to create value from the technology Vesttoo has developed is a worthy goal, creditors’ comments that insurtechs have lost market confidence and may struggle to create connections with insurance and reinsurance cedants are valid.
Creating value from the rebranded Vesttoo will be a big challenge, and any plan Vesttoo devisees must clearly state how it will distribute the value created.
Any “value maximizing transactions” cannot be solely aimed at the interests of InsurTech investors: creditors and those still suffering losses from LOC fraud must be given first priority when it comes to restoring salvageable value.
Read our full reporting regarding allegations of fraud or falsification of letter of credit (LOC) collateral related to the Best2 transaction..
