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In other words, Trenwick America went from being the key entity in one business

line comprised of domestic reinsurance operations for both Trenwick and Chartwell to

being the parent of all the U.S. corporations in that line. The ownership of these entities

is not really what the complaint challenges, it is the increase in Trenwick America’s debt

that resulted from the reorganization. I describe that next.

Concurrently with the merger of Trenwick and LaSalle, a new credit facility was

entered for $490 million, a figure $90 million higher than the previous figure. Of the

$490 million, $230 million was for a letter of credit dedicated to the Lloyd’s syndicates

managed by Chartwell Managing Agents. Before the restructuring and LaSalle merger,

Trenwick America had been on the hook for this portion of the credit facility in the event

parent Trenwick defaulted. After the LaSalle merger, the primary obligor on the $230

million letter of credit became Trenwick Holdings Limited, that is, the top U.K.

subsidiary, which was on top of all the Trenwick subsidiaries conducting business out of

the U.K. Trenwick America remained a guarantor, however, of that letter of credit. The

remaining $260 million of the credit facility was for a revolver. After the LaSalle

merger, Trenwick America went from being the secondary obligor to becoming the

primary obligor for that part of the facility. According to the Litigation Trust, the

revolver had no benefit for Trenwick America but simply was necessary for Trenwick’s

other operations. Thus, Trenwick America’s liability exposure under the credit facility

increased after the restructuring and LaSalle merger. That exposure was in addition to

the obligation to service $190 million in Assumed Notes by Trenwick America that

previously was owed by parent Trenwick.


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