Crisis-hit fintech Vesttoo has filed for Chapter 11 bankruptcy protection.
The Israeli-based firm, which uses artificial intelligence technology to connect the insurance industry and capital markets, is fighting fires on multiple fronts. Earlier this month the firm announced plans to sack 75% of staff amid a growing scandal over the alleged use of a fraudulent letter of credit in a multi-billion dollar insurance transaction.
The company also faces a New York court appearance in relation to a lawsuit and temporary restraining order on its assets filed by Aon. The broker is aiming to recover almost $137 million of funds that got swapped out of a White Rock cell and replaced with letters of credit that a bank said were invalid.
The firm says the application for Chapter 11 bankruptcy will give it 'breathing room', to fight the suit and root out those responsible for the LoC fraud, which it blames principally on "external factors" including foreign banks and financial institutions.
Banco Santander's venture arm Mouro Capital led an $80 million equity raise for Vestto at a $1 billion valuation in October. An imminent $200 million round at double the valuation has been abandoned in the wake of the ongoing crisis.