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Trenwick America’s 10-K filed in April 2001 reflected those changes, reporting

that at year end Trenwick America had approximately $367 million in indebtedness.

That debt was compromised of approximately $181 million in revolving loans

outstanding at that time, $75 million in senior notes, $1 million in contingent interest

notes, and $110 million in preferred securities.29 According to the 10-K, that was an

increase of approximately $46 million from the previous year.30

In a conclusory manner unsupported by pled facts, the complaint alleges that

Trenwick America was insolvent after the reorganization. For example, the complaint

alleges that the reorganization reduced the book value of Trenwick America from $565

million to $204 million because of the debt Trenwick had guaranteed.31 Of course, $204

million in positive value is a long way from insolvency. But the complaint fills this gap

through this conclusory paragraph:

On the books, [Trenwick America] appeared to be solvent. However, the public records did not give a true picture of the state of [Trenwick

America’s] [Trenwick]

affairs.

Instead,

the

[Trenwick

America]

Defendants

Defendants and [Trenwick Group Limited] wrongfully hid

and the

fact of assisted

[Trenwick America’s] insolvency through “creative by E&Y and PWC. To any objective observer, with

accounting,” access to its

true books and records, [Trenwick America’s] assets were than its liabilities. In fact, its adjusted equity value after the was hundreds of millions of dollars in the red. 32

worth far less reorganization

Absent from this paragraph are any real facts. Remarkably, the complaint entirely

fails to address the reality that LaSalle was a public company not controlled by Trenwick.

29 30 31 32

Stone Aff. Ex. 7 at F-17-F-18 (Trenwick America 10-K filed Apr. 2, 2001).

Compl. ¶ 89. . ¶ 90.

24

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