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options and equity in the former holding company.34 This exchange somehow is alleged

to have “provided a financial benefit” to the Trenwick directors “beyond that enjoyed by

the other shareholders of the corporation.”35

At most, this allegation suggests that the Trenwick directors received treatment

equivalent to that of other equityholders. When the new Bermuda holding corporation

was formed it was to become the publicly-listed company. Thus, in order for option

holders to retain their pre-existing value, they had to receive options to buy stock in the

new listed company. The receipt of such replacement options presents no conflict, in


As important, that the Trenwick directors received options is at odds with the

notion that they believed they were taking steps that would lead to the insolvency of

Trenwick. If Trenwick became insolvent, the options would have no value.

As to the bonus compensation, the complaint fails to provide any specifics. The

Litigation Trust had access to Trenwick’s books and records. The public filings it

references in the complaint do not indicate that any bonus compensation was to be paid to

the independent directors of Trenwick as a result of the LaSalle acquisition or that

Billett’s severance agreement was triggered in a manner that gave him a right to

payments. In connection with the Chartwell acquisition, there is a disclosure that Billett

received a bonus for his work on the transaction as CEO, but that the company had cut

the bonus pool for the succeeding year from which Billett and other executives could

34 35

. ¶ 85.


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