Vesttoo case: Aon agrees creditors can conduct some legal discovery

As the Chapter 11 bankruptcy case of beleaguered insurtech Vesttoo continues, the latest is that insurance and reinsurance broking giant Aon has agreed that the Committee of Unsecured Creditors can conduct some legal discovery on its entities, including White Rock.

As we were first to report earlier this month, the Committee of Unsecured Creditors to Vesttoo’s bankruptcy had requested approval to conduct legal discovery on Aon and certain related entities whose business dealings had been exposed to the letter of credit fraud that has occurred.

The Committee of Unsecured Creditors had already received court approval to conduct legal discovery on Vesttoo and its entities, but was also looking to access information that could help their investigation from Aon and its Bermuda based structure White Rock, as the companies had played key intermediary and service provider roles in the case of a number of Vesttto fraud-affected reinsurance deals.

Since the request to conduct discovery on Aon and its entities was originally filed, it now transpires that lawyers for the creditor committee had continued to confer with lawyers for Aon, Aon Insurance Managers and subsidiary White Rock Insurance (SAC) Ltd.

The lawyers for Aon and its entities “indicated that Aon and White Rock do not object to the relief sought in the Motion,” the latest filing states and as a result consented to an Order being entered to the bankruptcy court.

With this new Order agreed on, it is likely to be approved by the judge and so the creditors will be able to conduct certain discovery on Aon and its entities once that is in effect.

But, the legal discovery may be limited in its nature and reach, it appears, as Aon and White Rock “reserve all rights to object to the substance of discovery requests,” the filing states.

The Order that has been put before the bankruptcy judge by the creditors states, “Aon and White Rock do not object to the relief sought in the Motion, which is to serve discovery requests on Aon and White Rock while reserving all of their rights to object to the substance of the discovery requests.”

So Aon will be able to object to any of legal discovery requests made that it disagrees with, it appears.

It’s likely that objecting to the substance of a discovery request could then face dispute from the other parties involved (the creditors) and the judge would then likely decide whether to allow it or not.

It also appears that the approval to conduct discovery is restricted from including the specific segregated cells that are the subject of the Bermuda court process and liquidation, as the filed Order states that it will only be granted provided that, “For purposes of this Order and the subject discovery, the deadlines and other obligations of the portion of White Rock that is subject to the Order appointing the Joint Provisional Liquidators (“JPLs”), dated August 18, 2023, of the Supreme Court of Bermuda, shall be subject to the terms of the protocol covering discovery currently under negotiation or a further order of this Court.”

So it appears further negotiation may be occurring surrounding the ability to conduct legal discovery on the specific Vesttoo-linked cells of reinsurance transactions facilitated by Aon or housed in White Rock, while the Bermuda court process also needs to be taken into consideration here, as you’d expect.

This is another sign of progress though, as Aon has actively negotiated with the creditors and reached an agreement allowing for an Order related to discovery to be proposed to the court, which means transparency is gradually increasing, to the benefit of those out of pocket thanks to the fraud that has taken place.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.