Aon’s White Rock seeks discovery from HK investor Yu Po in Vesttoo fraud case

The Vesttoo Chapter 15 case filed by Aon’s White Rock is seeking discovery from parties including three banks previously identified in the collateral scandal and Hong Kong investor Yu Po to determine whether letters of credit (LOCs) on reinsurance transactions were in fact fraudulent and what role the beleaguered Israeli insurtech may have played.

Yu Po Holdings Limited and Yu Po Finance Limited of Hong Kong are named alongside the New York branch of China Construction Bank (CCB) and its Beijing-based parent, various entities of Banco Santander and a number of Standard Chartered Bank operations, including its Hong Kong branch.

Other discovery targets in the 28 August filing with the Delaware bankruptcy court include the Clearing House Interbank Payments System (CHIPS), the Federal Reserve Bank of New York and a host of Vesttoo entities.

The filing notes that CHIPS acts as a clearinghouse bank for US dollar-denominated wire transfers between domestic and international banks, while the Federal Reserve Bank also acts as a wire transfer clearinghouse between domestic and international banks.

The discovery targets also include officers, directors and employees of the Vesttoo entities and Truist Bank.

Reports have linked the Yu Po entities with the main investors on the other side of Vesttoo transactions related to the alleged LOC issues that were uncovered in July.

Bermuda action

As previously reported, an earlier court filing confirmed that 37 LOCs representing $2.35bn of purported collateral used to support White Rock Bermuda transactions with Vesttoo are allegedly fraudulent. The banks from which the LOCs are purported to have been procured are CCB, Banco Santander and Standard Chartered Bank.

White Rock launched the Chapter 15 case related to Vesttoo through Charles Thresh and Michael Morrison of Teneo, who were last month appointed joint provisional liquidators (JPLs) and authorised foreign representatives of the Aon-owned segregated cell platform by a Bermuda court.

In July this year, Aon reported to the Bermuda Monetary Authority (BMA) that certain LOCs it said were procured by Vesttoo as collateral on its White Rock platform were suspected to be fraudulent.

On 2 August the BMA initiated a restructuring proceeding by filing a petition with the Bermuda Court and on 18 August Thresh and Morrison were appointed JPLs of White Rock. Days before that appointment – and just after Aon and White Rock began legal proceedings against Vesttoo in New York – the insurtech filed for Chapter 11 protection in the US.

Chapter 15 bankruptcy is a legal process in the US that deals with cross-border insolvency cases.

Uncovering the truth

White Rock’s Chapter 15 filing states that it is seeking to protect White Rock and its property within the US territorial jurisdiction as well as uncover potential Vesttoo assets and liabilities and causes of action against third parties.

“Specifically, the discovery sought by the Foreign Representatives aim to uncover (a) whether the privately-held insurance-tech group Vesttoo, including through its directors and officers, engaged in suspicious financial dealings in connection with a purported fraud; and (b) how the purported fraud transpired, including but not limited to under the supervision and direction of Vesttoo directors and officers,” it continues.

It notes that the discovery targets may also have evidence of whether the banks were aware of the LOCs and assented to their terms.

A key aim of the Chapter 15 case brought by White Rock is to stay any adverse actions against White Rock and its assets in the US that may interfere with the restructuring proceedings in Bermuda.

“The Foreign Representatives seek immediate provisional relief to provide White Rock with the breathing room and stability necessary to administer the Bermuda Restructuring, and avoid detrimental interferences from creditors or other parties in interest preventing the JPLs to pursue their obligations under the JPL appointment order.

“This includes preventing creditors or parties in interest from ‘racing to the courthouse’ within the United States to obtain judgments that may affect White Rock and its assets in the United States. The temporary stay will, in turn, facilitate the implementation of and success of the Bermuda Restructuring,” it claims.