Creditors of the insurtech company Vesttoo have agreed to a $14.5 million settlement with Hannover Re for a longevity swap transaction, pending approval from a federal bankruptcy court in the United States.
The settlement motion was filed in the US Bankruptcy Court for the District of Delaware by the Official Committee of Unsecured Creditors, which was appointed during the Chapter 11 bankruptcy proceedings of Vesttoo.
Additionally, the parties involved have expressed their intention to request the sealing of a confidential exhibit related to the settlement, planning to replace it with a publicly filed summary.
The dispute centers on a 2022 transaction between Hannover Re and a Vesttoo entity, Bay XXI Limited Partnership, which had secured a £15 million irrevocable letter of credit from Banco Santander SS.
To circumvent the costs and delays associated with an independent actuarial analysis and potential arbitration, it was agreed that Hannover Re would be authorized to draw a total of £11,380,625 (approximately $14,487,137) plus interest from the letter of credit.
Upon completion of the withdrawal, Hannover Re is to return the letter of credit to Santander, marking it as “canceled,” and agreeing not to make any further draws. This arrangement also includes mutual releases from any further obligations or liabilities related to the swap transaction, potentially leaving the Bay XXI estate with at least £5,469,375 (about $6,891,412).
This agreement follows closely on the heels of the Delaware court’s approval of Vesttoo and its debtor affiliates’ Chapter 11 liquidation plan. Furthermore, the committee previously reached a $15.6 million settlement with Chaucer Group Ltd., representing 82.5% of the assets in a specific unit of Vesttoo, in another claim against the company.
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