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Trenwick could not do, however, is to defraud the creditors of Trenwick America in order

to benefit itself.

Supposedly, the reorganization of Trenwick’s subsidiaries in connection with the

LaSalle transaction was such a maneuver. As was discussed in colloquy at argument, the

Litigation Trust now contends that by the time of the LaSalle merger, Trenwick’s board

knew the entity could not prosper as a whole. Therefore, it allegedly concentrated its

largest liabilities and worst-performing assets in the line of subsidiaries under Trenwick

America, on the theory that it would allow that line to fail, leaving the rest of Trenwick to

thrive.

There is a fatal problem for this theory, however, which is that there are not pled

facts to support it. Nothing in the complaint suggests that Trenwick was able to off-load

its own ultimate responsibility for the $490 million in debt to Trenwick America alone.

Trenwick America’s assets were used by Trenwick to support debt procured by

Trenwick.76 Trenwick itself went into bankruptcy at the same time as Trenwick America.

Furthermore, despite all its rhetoric about a three-card monte, the Litigation Trust

has never rationally articulated how the reorganization of Trenwick’s subsidiaries worked

a particular injury on Trenwick itself or Trenwick America. It appears to be the case that

Trenwick America emerged out of the reorganization being primarily responsible for the

$260 million credit revolver, secondarily responsible for the Lloyd’s line of credit (if

Trenwick International could not pay it off), and having responsibility for $190 million in

76 Hefter Decl. Ex. C Ex. 10.1 at §§ 5.08, 6.14, 10 (Credit Agreement dated Nov. 24, 1999 between Trenwick and lenders); Stone Aff. Ex. 7 at F-17 (Trenwick America 10-K filed Apr. 2, 2001).

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