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Therefore, if the reorganization was in the best interests of Trenwick and its stockholders,

it was in the best interests of Trenwick America’s equity owners.

What is critical therefore is to figure out how some other constituency of Trenwick

America was somehow injured by the reorganization. As of the beginning of the

restructuring, we know that the Litigation Trust is upset that Trenwick America’s assets

have been pledged as security for the $400 million credit facility Trenwick procured. In

other words, even though Trenwick America did not own, for example, the Chartwell

Managing Agents business (to which $230 million of the credit facility was dedicated) or

the Trenwick International line of businesses (for which the remaining $170 million

revolving facility could be used at Trenwick’s discretion), Trenwick America was on the

hook for the full $400 million if Trenwick defaulted. That is a given at the get-go, or

, as some Latin lovers might prefer.

Before the internal reorganization began in March 2000, Trenwick America is at

the top of a chain of subsidiaries comprising only its own U.S. reinsurance businesses,

such as Trenwick America Reinsurance Corporation, and Chartwell’s U.S. reinsurance

businesses.28 By the end of the reorganization on September 27, 2000, Trenwick

America’s position is only slightly different from what it was at the get-go. Under

Trenwick America were the following additional business lines: the U.S. specialty

insurance businesses previously held under Canterbury, and an inactive subsidiary called

Drayton Company Limited.

28 As previously noted, Trenwick America may have assumed, within its business line, the operational responsibility for the business of Chartwell Reinsurance Company without having

formally acquired that Chartwell entity or its subsidiaries.

note 11.


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