Trenwick America files reorganization plan, creditors would get new securities

By Jeff Pines

Washington, March 29 - Trenwick America Corp. filed its disclosure statement and reorganization plan on March 26 with the U.S. Bankruptcy Court for the District of Delaware.

Class 1, or secured claims will be paid in full. Class 2, or priority claims, will be paid 100% of allowed claims.

The plan calls for creditors in classes 3-7 to get cash and/or new debt securities in exchange for their claims. The disclosure statement said the new debt securities will be cash flow instruments, so if there is no cash flow Trenwick will not be obligated to make any payments. The new senior notes and senior subordinated notes will have litigation trust certificates "stapled" to them.

The members of class 3, or the letter of credit bank group, will get a pro rata share of 50.03% of the new senior subordinated notes and litigation trust certificates. Class 3 has $162 million of allowed claims and is entitled to vote on the plan.

Under the plan, class 4, or senior note claims, will get a pro rata share of up to $10,000 in cash, 47.52% of the new senior notes and certificates and 23.75% of the new senior subordinated notes and trust certificates. This class has $76.94 million of allowed claims.

Class 5 claims, which are inter-company claims, will receive a pro rata share of 51.13% of the new senior notes and litigation trust certificates and 25.56% of the new senior subordinated notes and litigation trust certificates. This class has $87.79 million of allowed claims.

Class 6, or the Chartwell contingent interest note claims, will receive a pro rata share of up to $10,000 of cash, 1.12% of the new senior notes and litigation trust certificates and 0.56% of the new senior subordinated notes and litigation trust certificates. There are $1.81 million of allowed claims in this class.

Class 7 is general unsecured claims. Each holder will get 0.23 of the new senior notes and litigation trust certificates and 0.11% of the new senior subordinated notes and litigation trust certificates.

Class 8, or convenience claims, will receive 100% of allowed claims.

Class 9, or trust preferred claims, will receive a pro rata share of the new Trenwick America Corp.'s membership interests and residual trust certificates. This class has $120.21 million of allowed claims.

Equity holders will get nothing.

Trenwick, a unit of Bermuda-based insurance holding company Trenwick Group Ltd., filed for bankruptcy on Aug. 20, 2003. The company's Chapter 11 case number is 03-12635.

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