Trenwick America Corporation
Exhibit 99.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: ) Chapter 11
)
TRENWICK AMERICA CORPORATION, )
) Case No. 03-12635 (MFW)
)
Debtor. )
SECOND AMENDED PLAN OF REORGANIZATION
FOR TRENWICK AMERICA CORPORATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
DATED: October 26, 2004
WEIL, GOTSHAL & MANGES LLP THE BAYARD FIRM
200 Crescent Court, Suite 300 222 Delaware Avenue, Suite 900
Dallas, Texas 75201 P.O. Box 25130
(214) 746-7700 Wilmington, Delaware 19899
(302) 655-5000
Attorneys for the Plan Proponents
1
Trenwick America Corporation
Exhibit 99.1
J.C. Waterfall, Phoenix Partners, L.P., Phoenix Partners, II, L.P.,
Phaeton International (BVI) Ltd., and Tejas Securities Group, Inc. 401k Plan and
Trust FBO John J. Gorman, (collectively, the "Plan Proponents") hereby propose
the following Chapter 11 plan of reorganization for Trenwick America Corporation
(the "Debtor" or "TAC") pursuant to section 1121(c) of title 11 of the United
States Code.
ARTICLE I.
DEFINITIONS, RULES OF INTERPRETATION AND CONSTRUCTION
A. Definitions. Unless otherwise defined herein, or the context otherwise
requires, the following terms shall have the respective meanings set forth
below:
Section 1.01. Accredited Investor means any of the Standby Purchasers or
any holder of an Allowed Trust Preferreds Claim that is an "accredited investor"
as defined under Securities and Exchange Commission Regulation D.
Section 1.02. Administrative Claim means any right to payment constituting
a cost or expense of administration of the Chapter 11 Case of a kind specified
under section 503(b) of the Bankruptcy Code and entitled to priority under
sections 507(a)(1) and 507(b) of the Bankruptcy Code, including, without
limitation, any actual and necessary costs and expenses of preserving the
Estate, any actual and necessary costs and expenses of operating the Debtor's
business, any indebtedness or obligations incurred or assumed by the Debtor in
connection with the conduct of its business, including, without limitation, for
the acquisition or lease of property or an interest in property or the rendering
of services, all compensation and reimbursement of expenses to the extent
awarded by the Bankruptcy Court under sections 330, 331 or 503 of the Bankruptcy
Code, and any fees or charges assessed against the Estate under section 1930 of
chapter 123 of title 28 of the United States Code.
Section 1.03. Affiliate means a Person who directly or indirectly
controls, or is controlled, or is under the common control with, the Person
specified: a Person is deemed to control another Person if such Person possesses
the power to either directly or indirectly (i) vote ten percent (10%) or more of
the securities having ordinary voting power for the election of directors, or
Persons of similar functions of the Person specified or (ii) direct or cause to
direct the management policies of the Person specified, by contract or
otherwise.
Section 1.04. Allowed means, with reference to any Claim or Interest, any
Claim against, or Interest in, the Debtor (a) which (i) has been listed by the
Debtor in its Schedules, as such Schedules may be amended by the Debtor from
time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount
and not disputed or contingent, and with respect to which no contrary Proof of
Claim or Interest has been filed, and (ii) is not otherwise a Disputed Claim,
(b) that is specifically allowed under the Plan, (c) (i) for which a Proof of
Claim or request for payment of Administrative Claim has been filed by the
applicable Bar Date or otherwise deemed filed under applicable law and (ii) is
not a Disputed Claim or (d) any Claim or Interest the amount or existence of
which, if Disputed, (i) has been determined by a Final Order of a court of
competent jurisdiction other than the Bankruptcy Court, or (ii) has been allowed
by Final Order of the Bankruptcy Court; provided, however, that any Claims or
Interests allowed solely for the
1
Trenwick America Corporation
Exhibit 99.1
purpose of voting to accept the Plan pursuant to an order of the Bankruptcy
Court shall not be considered "Allowed" hereunder.
Section 1.05. Applicable Share means, (a) on any Quarterly Distribution
Date in respect of each New Senior Subordinated Note or the Senior Litigation
Trust Certificates, the Pro Rata Amount of the Debt Payment or Trust Payment due
or payable on such Quarterly Distribution Date and (b) on each Quarterly
Distribution Date after the New Senior Subordinated Notes have been paid in
full, (i) in respect of each New Series A Junior Subordinated Note or the Junior
Litigation Trust Certificates, the Pro Rata Amount of the Subordinated Note
InsCorp Percentage divided by 1.10 of the Debt Payment or Trust Payment due or
payable on such Quarterly Distribution Date, and (ii) in respect of each New
Series B Junior Subordinated Note or the Junior Litigation Trust Certificates,
the Pro Rata Amount of the Subordinated Note Series B Percentage divided by 1.10
of the Debt Payment or Trust Payment due on such Quarterly Distribution Date.
Section 1.06. Assets means all assets of the Estate of any nature
whatsoever, including, without limitation, all property of the Estate pursuant
to Section 541 of the Bankruptcy Code, Cash, Causes of Action, tax refunds,
claims of right, interests and property, real and personal, tangible and
intangible.
Section 1.07. Available Cash means all funds received by New TAC from: (a)
dividends paid by TARCO; (b) payments received from TASCO; (c) distributions
from LaSalle UK in respect of the LaSalle UK Notes; (d) the Litigation Trust and
(e) any other source; minus Cash or other reserves necessary for New TAC to (i)
conduct its operations and business; (ii) comply with applicable law, including
any stay order issued by any appropriate governmental body prohibiting the
distribution of Cash, and (iii) prosecute or defend against any lawsuit to the
extent reasonably necessary; provided, however, that to the extent the
Litigation Trust is not formed pursuant to the Plan, MBIA and the Plan
Proponents shall agree upon the amount of funds that shall be expended under
subsection (iii) with respect to the Causes of Action.
Section 1.08. Available Unclaimed Property means Unclaimed Property that
is unclaimed on the first anniversary of the date of distribution of such
property (together with any interest thereon and proceeds thereof).
Section 1.09. Ballot means the ballot distributed to a holder of a Claim
on which ballot such holder of a Claim may, inter alia, vote for or against the
Plan.
Section 1.10. Bankruptcy Code means the Bankruptcy Reform Act of 1978, as
amended and codified at title 11 of the United States Code, 11 U.S.C. ss.ss. 101
et seq.
Section 1.11. Bankruptcy Court means the United States Bankruptcy Court
for the District of Delaware, having jurisdiction over the Chapter 11 Case.
Section 1.12. Bankruptcy Rules means collectively the Federal Rules of
Bankruptcy Procedure and the Official Bankruptcy Forms, as amended, the Federal
Rules of Civil Procedure, as amended, made applicable through the Federal Rules
of Bankruptcy Procedure, and the Local Rules of the Bankruptcy Court.
2
Trenwick America Corporation
Exhibit 99.1
Section 1.13. Bar Date means such dates fixed by Final Orders of the
Bankruptcy Court by which Proofs of Claim, Proofs of Interest, or requests for
allowance of Administrative Claims must be Filed.
Section 1.14. Business Day means any day except a Saturday, Sunday, or
"legal holiday" as such term is defined in Bankruptcy Rule 9006(a).
Section 1.15. Cash means cash and cash equivalents in U.S. dollars.
Section 1.16. Causes of Action means any and all claims, suits, rights,
actions, causes of action, recoveries, and judgments that could have been
brought by or on behalf of the Estate or Debtor in Possession arising before, on
or after the Petition Date, known or unknown, suspected or unsuspected, in
contract or in tort, at law or in equity or any theory of law liquidated or
unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed,
whether filed or initiated prior to the Confirmation Date or the Effective Date
or afterward, including, but not limited to (i) those referred to or described
in the Disclosure Statement, including without limitation, those referred to or
described in Section IV.C. of the Disclosure Statement, (ii) those that belonged
to the Debtor prior to the Petition Date, (iii) those on behalf of the Estate's
creditors, (iv) those the Estate or Debtor in Possession may have against any
Person arising under chapter 5 of the Bankruptcy Code, or any similar provision
of state law or any other law, rule regulation, decree, order, statute or
otherwise, (v) those claims, rights, suits, judgments, causes of action, and/or
judgments, recoveries or proceeds therefrom that may be assigned by the holders
thereof to the Estate, Debtor in Possession or the Litigation Trust, (vi)
derivative creditor and shareholder claims and (vii) right of setoff or
recoupment, and claims on contracts or breaches of duty imposed by law;
provided, however, that Causes of Action shall exclude suits, claims, rights and
causes of action subject to release or exculpation pursuant to Article VII of
the Plan.
Section 1.17. CCM1 means a corporate capital member formed by Magicsunny
to support underwriting for 2004 and subsequent years of account.
Section 1.18. Chapter 11 Case means case number 03-12635 (MFW) commenced
by the Debtor under Chapter 11 of the Bankruptcy Code on the Petition Date in
the Bankruptcy Court, and styled In re Trenwick America Corporation.
Section 1.19. CI Notes means the 8.00% Contingent Interest Notes Due June
30, 2006, as amended, supplemented or otherwise modified from time to time,
issued on December 1, 1995 by Piedmont Management Company, Inc.,
predecessor-in-interest to Chartwell Re Corporation, predecessor-in-interest to
TGI, and assumed by the Debtor in August 2000.
Section 1.20. CI Notes Claim means the claims arising under the CI Notes.
Section 1.21. CI Notes Indenture means that certain Indenture, dated as of
December 1, 1995, relating to the CI Notes, as amended, modified or supplemented
from time to time.
Section 1.22. CI Notes Indenture Trustee means U.S. Bank, N.A. as
successor Indenture Trustee, and any successor indenture trustee thereto under
the CI Notes Indenture.
3
Trenwick America Corporation
Exhibit 99.1
Section 1.22A. CI Notes Indenture Trustee Fee means the reasonable
compensation, fees, expenses, disbursements and indemnity claims, including,
without limitation, attorneys' and agents' fees and disbursements, incurred by
the CI Notes Indenture Trustee.
Section 1.23. Claim means a claim, as such term is defined in section
101(5) of the Bankruptcy Code, against the Debtor.
Section 1.24. Claims Agent means CPT Group, Inc. or such successor as New
TAC may designate.
Section 1.25. Class means a group of Claims or Interests as classified in
Article III under the Plan.
Section 1.26. Class [ ] Claim means a Claim in the particular Class of
Claims identified and described in Article III of the Plan.
Section 1.27. Collateral means any property or interest in property of the
Estate that is subject to an unavoidable Lien to secure the payment or
performance of a Claim.
Section 1.28. Committee Released Parties means the Creditor's Committee
and each of its members (but only in their capacity as such) and each of their
respective officers, directors, principals, employees, representatives, agents,
or consultants, including any professionals retained by the Creditor's Committee
or any of its members (but only in their respective capacities as such).
Section 1.29. Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order.
Section 1.30. Confirmation Hearing means the hearing conducted by the
Bankruptcy Court to consider confirmation of the Plan.
Section 1.31. Confirmation Order means the order, entered by the Clerk of
the Bankruptcy Court, confirming the Plan in accordance with the provisions of
the Bankruptcy Code.
Section 1.32. Convenience Claim means any Claim, which would otherwise be
a General Unsecured Claim, against the Debtor that (i) is Allowed in an amount
of $500.00 or less, or (ii) is Allowed in an amount greater than $500.00, but
which is reduced pursuant to Section 6.34 of the Plan to an amount of $500.00 or
less.
Section 1.33. Credit Documents means collectively, without duplication,
(i) the Credit Agreement, dated as of November 24, 1999, among TGI, and the
lenders party thereto, as amended, modified, supplemented or replaced from time
to time, (ii) the Credit Agreement dated as of November 24, 1999 and Amended and
Restated as of September 27, 2000, among TAC, Trenwick Holdings Limited and the
lenders party thereto, as amended, modified, supplemented or replaced from time
to time, (iii) the Amending and Restating Agreement Relating to the Credit
Agreement, dated December 8, 2003, among Magicsunny, the lenders and other
parties thereto, as amended, modified, supplemented or replaced from time to
time, (iv) the Facilities
4
Trenwick America Corporation
Exhibit 99.1
Agreement, dated December 8, 2003, among Magicsunny, the lenders and other
parties thereto, as amended, modified, supplemented or replaced from time to
time, and (v) in each case, any of the documents or instruments related thereto,
including without limitation, TAC's guaranty, any other guaranties, security
agreements, pledge agreements and amendments, other modifications or
replacements thereto executed from time to time in connection therewith.
Section 1.34. Creditors' Committee means the official committee of
unsecured creditors appointed on September 4, 2003, subsequently reconstituted
on January 6, 2004, in the Chapter 11 Case.
Section 1.35. Debt Payment means a payment made from Free Cash Flow by New
TAC on the New TAC Debt Securities under the Plan.
Section 1.36. Debtor shall have the meaning ascribed in the introductory
paragraph hereof.
Section 1.37. Debtors shall mean, collectively, TAC, TGL and LSH.
Section 1.38. Debtor in Possession means the Debtor in its capacity as
debtor in possession in the Chapter 11 Case pursuant to sections 1107(a) and
1108 of the Bankruptcy Code.
Section 1.39. Disallowed means the extent to which a Disputed Claim is not
Allowed whether by Final Order of the Bankruptcy Court, by agreement of the
parties or otherwise.
Section 1.40. Disclosure Statement means the written disclosure statement
that relates to the Plan, as amended, supplemented or modified from time to
time, and as approved by the Bankruptcy Court pursuant to section 1125 of the
Bankruptcy Code.
Section 1.41. Disputed means any Claim, or Interest, or any portion
thereof, that is not an Allowed Claim or Allowed Interest, including, but not
limited to, Claims or Interests (a)(i) that have not been Scheduled by the
Debtor, or (ii) have been Scheduled at zero or as contingent, unliquidated or
disputed, or (b) that are the subject of a Proof of Claim that differs in
nature, amount or priority from the Debtor's Schedules, and (c) in either case,
the allowance or disallowance of which are not the subject of a Final Order.
Section 1.42. Disputed Claims Reserve Account means an account established
for the payment of Disputed Claims that become Allowed Claims after the
Effective Date, and which shall hold Cash, New TAC Debt Securities and New TAC
Interests in trust for the benefit of the holders of Disputed Claims that become
Allowed Claims, and shall not constitute property of the Debtor's Estate or New
TAC.
Section 1.43. Distribution Address means the address set forth in the
relevant Proof of Claim, as such address may have been updated pursuant to
Bankruptcy Rule 2002(g). If no Proof of Claim is Filed in respect of a
particular Claim, such defined term means the address set forth in the Debtor's
Schedules, as such address may have been updated pursuant to Bankruptcy Rule
2002(g).
5
Trenwick America Corporation
Exhibit 99.1
Section 1.44. Distribution Date means any date on which a Distribution is
made, including, without limitation, the Initial Distribution Date or a
Quarterly Distribution Date.
Section 1.45. Distribution Record Date means one Business Day prior to the
Distribution Date.
Section 1.46. Effective Date means the earlier to occur of: (i) the
Business Day selected by the Plan Proponents to occur as soon as practicable
following the date that all of the conditions to the occurrence of the effective
date of the Plan set forth in Section 9.01 herein, have been satisfied or waived
and (ii) January 31, 2005, as the same may be extended in the Plan Proponents'
sole discretion.
Section 1.47. Escrow Excess Amount means the amount, if any, that the Cash
in the New TAC Bank Group Escrow exceeds the LoC Bank Group's Maximum TAC Claim.
Section 1.48. Estate means the estate of TAC in its Chapter 11 Case
created by section 541 of the Bankruptcy Code upon the commencement of the
Chapter 11 Case.
Section 1.49. Exhibit means an exhibit to either this Plan or the
Disclosure Statement, including the Plan Supplement.
Section 1.50. Face Amount means (a) with respect to any Claim for which a
Proof of Claim is Filed, an amount equal to: (i) the liquidated amount, if any,
set forth therein; and/or (ii) any other amount estimated by the Bankruptcy
Court in accordance with section 502(c) of the Bankruptcy Code and the relevant
provisions of this Plan; (b) if no Proof of Claim is Filed and such Claim is
scheduled in the Debtor's Schedules, the amount of the Claim scheduled as
undisputed, fixed and liquidated; or (c) with respect to the New TAC Debt
Securities, the principal amount of the New TAC Debt Security as issued by New
TAC.
Section 1.51. File or Filed means filed with the Bankruptcy Court in the
Chapter 11 Case and, with respect to Proofs of Claim, with the Claims Agent in
accordance with an order of the court.
Section 1.52. Final Claims Resolution Date means the date on which all
Disputed Claims have been resolved, either by consent, order of the Bankruptcy
Court or otherwise.
Section 1.53. Final LoC Claim Date means, with respect to all of the LoCs
Outstanding, the first date upon which all such LoCs Outstanding (i) have been
drawn, (ii) expired or (iii) are released.
Section 1.54. Final Order means an order as to which the time to appeal,
petition for certiorari, or move for reargument or rehearing has expired and as
to which no appeal, petition for certiorari, or other proceedings for reargument
or rehearing shall then be pending or as to which any right to appeal, petition
for certiorari, move for reargument, or rehearing shall have been waived in
writing or, in the event that an appeal, writ of certiorari, or reargument or
rehearing thereof has been sought, such order shall have been affirmed by the
highest court to which such order was appealed, or certiorari has been denied,
or from which reargument or
6
Trenwick America Corporation
Exhibit 99.1
rehearing was sought, and the time to take any further appeal, petition for
certiorari or motion for reargument or rehearing shall have expired.
Section 1.55. Free Cash Flow means Available Cash of New TAC from and
after the full indefeasible payment of the New Term Loan Facility and the New
Revolver in Cash.
Section 1.56. General Unsecured Claim means an unsecured Claim that is not
an Administrative Claim, a Priority Tax Claim, a Priority Claim, an LoC Bank
Group Claim, a Senior Notes Claim, a CI Notes Claim, an InsCorp Claim, a Section
510(b) Claim, an Other Intercompany Claim or a Trust Preferreds Claim.
Section 1.57. HSBC means HSBC Bank USA, as one or more trustees under the
Trust Preferreds Agreements.
Section 1.58. HSBC Released Parties means HSBC and its successors, assigns
and Affiliates and its officers, directors, principals, employees, agents,
representatives, consultants and professionals (but only in their respective
capacities as such).
Section 1.59. Indenture Trustees means collectively, the Senior Notes
Indenture Trustee, the CI Notes Indenture Trustee and the Trust Preferreds
Indenture Trustee.
Section 1.60. Initial Distribution means that distribution to holders of
Allowed Claims as provided for in Sections 6.10, 6.11, 6.12 and 6.15 of the
Plan.
Section 1.61. Initial Distribution Date means the first Business Day
following the Effective Date or as soon as practicable thereafter, but in no
event later than 30 days following the Effective Date.
Section 1.62. Initial Trust Funding Amount means the net proceeds of the
New Term Loan Facility and the New Revolver Facility to be transferred to the
Litigation Trust on the Effective Date, which funds shall be sufficient to fund
costs of the Litigation Trust in the discretion of the Plan Proponents which are
permitted under the Litigation Trust Agreement.
Section 1.63. InsCorp means the Insurance Corporation of New York, a New
York insurance company, which is the wholly owned direct subsidiary of TARCO.
Section 1.64. InsCorp Claim means the Prepetition Claim of the Debtor's
Affiliate, InsCorp.
Section 1.65. Insider shall have the meaning ascribed to it in section 101
of the Bankruptcy Code.
Section 1.66. Intercreditor Agreement shall mean that certain agreement
between and among certain holders of the New TAC Interests and the New TAC Debt
Securities, a copy of which will be included in the Plan Supplement.
Section 1.67. Interest means any (a) share in a corporation, whether or
not transferable or denominated "stock," or similar security; (b) membership
interest in a limited liability
7
Trenwick America Corporation
Exhibit 99.1
company; (c) interest of a limited partner in a limited partnership; (d) warrant
or right, other than a right to convert, to purchase, sell or subscribe to a
share, security or interest of a kind specified in subparagraphs (a), (b) and
(c) of this paragraph; or (e) interest of a general partner in a limited or
general partnership.
Section 1.68. IRS means the Internal Revenue Service.
Section 1.69. JP Morgan Chase Released Parties means JPMorgan Chase Bank
and its predecessors, successors, assigns, and Affiliates and its officers,
directors, principals, employees, agents, representatives, consultants and
professionals (but only in their respective capacities as such).
Section 1.70. Junior Litigation Trust Certificates means the Litigation
Trust Certificates issued in conjunction with the New Junior Subordinated Notes.
Section 1.71. LaSalle Re means LaSalle Re Limited, a licensed Bermuda
insurance company and a direct subsidiary of LSH.
Section 1.72. LaSalle UK means LaSalle (UK) Ltd., a Bermuda company that
is a U.K. tax resident and is a direct subsidiary of LaSalle Re.
Section 1.73. LaSalle UK Notes means those certain subordinated promissory
notes, due January 1, 2010, issued by LaSalle UK to TAC in the aggregate
principal amount of $59,984,339.00.
Section 1.74. Letter of Credit Facility means the facilities under the
Credit Documents pursuant to which letters of credit were or are to be issued.
Section 1.75. Letter of Intent shall mean that certain letter of intent
entered into on August 6, 2003, between the signatories thereto, including TAC;
the Senior Noteholders; the Steering Committee of the LoC Bank Group on behalf
of the LoC Banks; and Magicsunny, contemplating proposed long-term restructuring
of TAC's debt obligations, as the same was modified on May 17, 2004 by agreement
of Steering Committee of the LoC Bank Group on behalf of the LoC Banks; J.C.
Waterfall; Phoenix Partners, L.P.; Phoenix Partners II, L.P.; Phaeton
International (BVI), Ltd.; Tejas Securities Group Inc. 401k Plan and Trust FBO
John J. Gorman, and MBIA Insurance Corporation (together with any exhibits
thereto, including but not limited to the term sheet), which is attached hereto
as Exhibit "A".
Section 1.76. Lien means any charge against or interest in property to
secure payment of a debt or performance of an obligation.
Section 1.77. Litigation Trust means a trust formed in accordance with the
Litigation Trust Agreement to be dated as of the Effective Date into which all
Causes of Action not released, waived or enjoined under Article VII of the Plan
shall automatically vest upon the Effective Date and into which the Estate and
Debtor in Possession shall be deemed to have automatically granted, on behalf
and for the benefit of its creditors, all of its rights to (i) pursue all such
Causes of Action and (ii) receive all Causes of Action recoveries.
8
Trenwick America Corporation
Exhibit 99.1
Section 1.78. Litigation Trust Agreement means the trust agreement for the
Litigation Trust in the form to be contained in the Plan Supplement.
Section 1.79. Litigation Trust Assets means (i) the Causes of Action that
will automatically vest, for the benefit and on behalf of the Estate and its
creditors, in the Litigation Trust upon the Effective Date, including all of the
Estate and Debtor in Possession's rights, on behalf and for the benefit of its
creditors, to pursue all Causes of Action and receive all Causes of Action
recoveries, (ii) any claims, rights, suits, judgments, causes of action, and/or
judgments, recoveries or proceeds therefrom that might be assigned by the
holders thereof to the Litigation Trust, and (iii) funding sufficient to pursue
(i) and (ii) above.
Section 1.80. Litigation Trust Board means the board established pursuant
to this Plan to advise, assist and supervise the Litigation Trustee(s) in the
administration of the Litigation Trust pursuant to the Litigation Trust
Agreement.
Section 1.81. Litigation Trust Certificates means the certificates of
interest in the Litigation Trust to be issued by the Litigation Trust to all
holders of the New TAC Debt Securities on the Initial Distribution Date in a
Face Amount equal to the Face Amount of the New TAC Debt Securities issued to
such holders, including the Senior Litigation Trust Certificates and the Junior
Litigation Trust Certificates. Once issued, the Litigation Trust Certificates
cannot be sold, transferred, or otherwise disposed of separately from the New
TAC Debt Securities to which they are attached and relate upon their initial
issuance.
Section 1.82. Litigation Trustee(s) means the trustee(s) of the Litigation
Trust, as designated in this Plan and the Litigation Trust Agreement. In the
prosecution of any Causes of Action, the Litigation Trustee(s) shall obtain the
benefit of any tolling provisions or extensions available to the Estate or
Debtor in Possession prior to the Confirmation Date or Effective Date, including
those set forth in sections 108(a), 546(a), 549(d) and 550(f) of the Bankruptcy
Code.
Section 1.83. Lloyd's means the Society of Lloyd's as constituted under
the Lloyd's Acts 1871-1982, a London-based insurance marketplace.
Section 1.84. LoC Bank means each financial institution and its
predecessors, successors, assigns and Affiliates, that is, or was, a party in
any capacity at any time to the Credit Documents.
Section 1.85. LoC Bank Group means, collectively, the LoC Banks.
Section 1.86. LoC Bank Group Administrative Agent means JPMorgan Chase
Bank or any successor administrative agent under the Credit Documents.
Section 1.87. LoC Bank Group Claim means, as of the Effective Date, any
Claim of the LoC Bank Group arising under the Credit Documents, including any
reasonable legal and professional fees and expenses incurred or to be reserved
by the LoC Bank Group under the Credit Documents, and amounts owed under any
LoCs Outstanding, minus any amounts paid to the LoC Bank Group on account of
such LoC Bank Group Claim and any amounts received by the LoC Bank Group either
directly or indirectly on account of the Prepetition Claim of Trenwick
(Barbados).
9
Trenwick America Corporation
Exhibit 99.1
Section 1.88. LoC Bank Group's Maximum TAC Claim means, with respect to
all of the LoCs Outstanding, the lesser of (i) $19,505,000 and (ii) the
aggregate amounts drawn on all of the LoCs Outstanding as of a LoC Claim Date
plus the amount, if any, of reasonable legal and professional fees and expenses;
minus amounts received by holders of Class 3 Claims on account of the LoC Bank
Group Claim from any source (other than any amounts received by the LoC Bank
Group in connection with the LoC Bank Group UK Equity Interest) and any amounts
received by the LoC Bank Group either directly or indirectly on account of the
Prepetition Claim of Trenwick (Barbados).
Section 1.89. LoC Bank Group Settlement means the settlement embodied in
the Plan pursuant to section 1123(b)(3)(A) of the Bankruptcy Code pursuant to
which, among other things, the LoC Bank Group has agreed to the treatment of its
Claims as provided herein, including, among other things, the allowance of the
LoC Bank Group Claim in the maximum amount of $19,505,000 and a mutual and
general release, as more fully set forth in Section 7.07 herein.
Section 1.90. LoC Bank Group UK Equity Interest means any direct or
indirect equity participation(s) of any LoC Bank in a member of Lloyd's
including, without limitation, any amounts owed to any LoC Bank in connection
with preference shares held by Pebbles in Packchance.
Section 1.91. LoC Bank Released Parties means each LoC Bank (but only in
its capacity as such) and its officers, directors, principals, employees,
agents, representatives, consultants and professionals (but only in their
respective capacities as such).
Section 1.92. LoC Claim Date means, with respect to an LoC Outstanding,
the date upon which such LoC Outstanding has been either partially or fully
drawn.
Section 1.93. LoC Outstanding or LoCs Outstanding means the letter(s) of
credit that have been, or will be issued and are, or will be, outstanding
pursuant to the Letter of Credit Facility and Credit Documents.
Section 1.94. LSH means LaSalle Re Holdings Limited, a Bermuda company and
an affiliate of TAC that is currently in provisional liquidation.
Section 1.95. Magicsunny means an entity formerly known as Magicsunny
Limited, a U.K. company that purchased assets of certain of TAC's affiliates.
Section 1.96. Magicsunny Released Parties means Magicsunny and its
officers, directors, principals, employees, agents, representatives, consultants
and professionals (but only in their respective capacities as such), which
receive releases to the extent provided herein.
Section 1.97. MBIA means MBIA Insurance Corporation, a New York
corporation.
Section 1.98. New Indenture Trustee means the indenture trustee, and any
successors thereto, under the New Indentures.
10
Trenwick America Corporation
Exhibit 99.1
Section 1.99. New Indentures means the indentures to be entered into by
New TAC with respect to the New TAC Debt Securities in, or in substantially, the
form thereof contained in the Plan Supplement.
Section 1.100. New Junior Subordinated Note Indenture means the New Junior
Subordinated Note Indenture, dated as of the Effective Date, entered into by New
TAC and the New Indenture Trustee on terms reasonably acceptable to the Plan
Proponents, the LoC Bank Group and MBIA pursuant to which the New Junior
Subordinated Notes will be issued in, or substantially in, the form thereof
contained in the Plan Supplement. The New Junior Subordinated Notes shall be
subordinated to the New Revolver Facility, the New Term Loan Facility and the
New Senior Subordinated Notes on terms, which shall be reasonably acceptable to
the Plan Proponents, the LoC Bank Group and MBIA. The New Junior Subordinated
Notes shall be secured by a third Lien on all of collateral securing the New
Revolver Facility, the New Term Loan Facility and the New Senior Subordinated
Notes.
Section 1.101. New Junior Subordinated Notes means, collectively, the New
Series A Junior Subordinated Notes and the New Series B Junior Subordinated
Notes to be issued by New TAC on the Initial Distribution Date pursuant to the
Plan and the New Junior Subordinated Note Indenture, which shall be junior in
priority to the New Senior Subordinated Notes.
Section 1.102. New Loan Agreement means the loan agreement pursuant to
which the New Revolver Facility and New Term Loan Facility will be made
available to New TAC and the Litigation Trust, as borrowers, with those holders
of Allowed Trust Preferreds Claims that are Accredited Investors and are not
Insiders of the Debtor (to the extent any such holders participate in the Rights
Offering) or the Standby Purchasers, as lenders, in, or substantially in, the
form provided in the Plan Supplement and having the terms described in Section
V.C.5.(f) of the Disclosure Statement. The New Loan Agreement shall be secured
by a first Lien on substantially all of the assets of New TAC.
Section 1.103. New Revolver Facility means the revolving credit facility
in the maximum amount of $2,000,000 available to New TAC and the Litigation
Trust pursuant to the New Loan Agreement, which will be provided by holders of
Trust Preferreds eligible to participate in the Rights Offering. MBIA may elect
to be an assignee or participant in the New Revolver Facility.
Section 1.104. New Senior Subordinated Note Indenture means the New Senior
Subordinated Note Indenture entered into by New TAC and the New Indenture
Trustee pursuant to which the New Senior Subordinated Notes will be issued on
terms reasonably acceptable to the Plan Proponents, the LoC Bank Group and MBIA
in, or substantially in, the form thereof contained in the Plan Supplement. The
New Senior Subordinated Notes shall be subordinated to the New Revolver Facility
and the New Term Loan Facility on terms, which shall be reasonably acceptable to
the Plan Proponents, the LoC Bank Group and MBIA. The New Senior Subordinated
Notes shall be secured by a second Lien on all of collateral securing the New
Revolver Facility and the New Term Loan Facility.
Section 1.105. New Senior Subordinated Notes means, collectively, each of
the New Senior Subordinated Notes, issued by New TAC on the Initial Distribution
Date pursuant to the Plan and the New Senior Subordinated Note Indenture to the
holders of Class 4, 5, 6, 7 and 10
11
Trenwick America Corporation
Exhibit 99.1
Claims pursuant to the Plan. The New Senior Subordinated Notes shall be due
eighty-four (84) months after the Effective Date and shall be senior in priority
and right of payment to the New Junior Subordinated Notes.
Section 1.106. New Series A Junior Subordinated Notes means New TAC's
Series A Subordinated Notes due ninety (90) months after the Effective Date and
issued pursuant to the New Junior Subordinated Note Indenture to the holders of
Class 5 Claims pursuant to the Plan.
Section 1.107. New Series B Junior Subordinated Notes means New TAC's
Series B Subordinated Notes due ninety (90) months after the Effective Date and
issued pursuant to the New Junior Subordinated Note Indenture to the holders of
Class 3, 4, 6, 7 and 10 Claims pursuant to the Plan.
Section 1.108. New TAC means the new limited liability company that on the
Effective Date will, itself or through its wholly owned direct and indirect
subsidiaries, succeed to the New TAC Assets and Liabilities, as may be modified
under this Plan pursuant to the Restructuring Transactions.
Section 1.109. New TAC Assets and Liabilities means all of the Estate's
assets and liabilities, which shall automatically vest in New TAC on the
Effective Date, except that the New TAC Assets and Liabilities shall not include
the Litigation Trust Assets.
Section 1.110. New TAC Bank Group Escrow means that certain escrow account
established by New TAC to hold in trust the distributions to holders of Allowed
Class 3 Claims under this Plan until the Final LoC Claim Date.
Section 1.111. New TAC Bank Group Escrow Agreement means that certain
escrow agreement to be entered into among New TAC, an escrow agent and the LoC
Bank Group or the LoC Bank Group Administrative Agent, in, or substantially in,
the form to be contained in the Plan Supplement.
Section 1.112. New TAC Certificate of Formation means the certificate of
formation forming New TAC as an entity, which shall be filed with the Secretary
of State of the State of Delaware, in accordance with ss. 18-201 of the Delaware
Limited Liability Company Act, in, or substantially in, the form of the New TAC
Certificate of Formation contained in the Plan Supplement.
Section 1.113. New TAC Debt Securities means collectively, the New Senior
Subordinated Notes and the New Junior Subordinated Notes.
Section 1.114. New TAC Escrow Agent means the agent appointed pursuant to
the New TAC Bank Group Escrow Agreement.
Section 1.115. New TAC Interests means the membership interests of New TAC
to be issued by New TAC on the Effective Date pursuant to the Plan.
12
Trenwick America Corporation
Exhibit 99.1
Section 1.116. New TAC Limited Liability Company Agreement means the
agreement governing the management and membership of New TAC, in, or in
substantially, the form of the New TAC Limited Liability Company Agreement
contained in the Plan Supplement.
Section 1.117. New TAC Securities means collectively the New TAC Debt
Securities and the New TAC Interests.
Section 1.118. New Term Loan Facility means the term loan facility made
available to New TAC and the Litigation Trust pursuant to the New Loan
Agreement.
Section 1.119. Oaks means collectively Oak Dedicated Limited, Oak
Dedicated Two Limited, Oak Dedicated Three Limited, each of which were
subsidiaries of LaSalle Re, and Oak Dedicated Four Limited.
Section 1.120. Old Common Stock means the common stock issued by the
Debtor and outstanding immediately prior to the Effective Date or held in
treasury.
Section 1.121. Old Securities means collectively the Senior Notes, the CI
Notes and the Trust Preferreds.
Section 1.122. Other Intercompany Claims means the Prepetition Claims of
the Debtor's Affiliates, TARCO and Trenwick (Barbados) (but specifically
excluding any Claim of LaSalle Re).
Section 1.123. Packchance means Packchance Limited, a company incorporated
in England and Wales under registered number 4765920 and any successors or
assigns thereof.
Section 1.124. Pebbles means Pebbles Limited, a company incorporated in
England and Wales under registered number 04864026 and any successors or assigns
thereof.
Section 1.125. Person means an individual, corporation, general
partnership, limited partnership, limited liability company, limited liability
partnership, association, joint venture, trust, estate, unincorporated
organization, or a government or any agency or political subdivision thereof.
Section 1.126. Persons Excluded From Releases means, the following Persons
in any and all capacities unless otherwise noted: (i) TGL, LSH and any and all
of their predecessors, successors, assigns, parents, subsidiaries and present
and past Affiliates, provided, however, until the LoC Bank Group has received
payment in full on its claim for reimbursement or otherwise on account of the
LoCs Outstanding, no action of any kind will be taken by any Person on behalf of
TAC, New TAC or the Litigation Trustee(s) against any of the parties (except to
the extent that such parties are Trenwick (Barbados) or any direct or indirect
subsidiaries of TAC) in this subclause (i) except to the limited extent
necessary (I) to establish a timely, sufficient and adequate claim against such
parties, or (II) to enter into a timely, sufficient and adequate tolling
agreement with such parties that sufficiently and adequately preserves the
ability to enforce any avoidance or other actions against such parties and that
shall toll any statute of limitations against such parties until the LoC Bank
Group has received payment in full of its claim for reimbursement or otherwise
on account of the LoCs Outstanding, provided further that to the
13
Trenwick America Corporation
Exhibit 99.1
extent, and only to the extent, that the parties fail in good faith to either
establish a timely, sufficient and adequate claim or enter into a timely,
sufficient and adequate tolling agreement referenced in subclauses (I) or (II)
of this subclause (i), any Person on behalf of TAC, New TAC or the Litigation
Trustee(s) may bring an action against one or more of the parties referenced in
this subclause (i), but, so long as any avoidance or other judgment is
sufficiently and adequately preserved, the Person initiating such action shall
not enforce any judgment obtained in connection with such actions until the LoC
Bank Group has received payment in full on its claim for reimbursement or
otherwise on account of the LoCs Outstanding; no tolling agreement will be
deemed sufficient or adequate and no judgment will be deemed sufficiently or
adequately preserved under this provision if any claim or judgment to avoid the
transfer of Trenwick Holdings Limited ("THL") and/or its subsidiaries is not
adequately preserved; should any judgment to avoid any transfer be enforced
before the LoC Bank Group has received payment in full on its claim for
reimbursement or otherwise on account of the LoCs Outstanding, to the extent
such judgment is against parties other than Trenwick (Barbados) or any direct or
indirect subsidiaries of TAC, the LoC Bank Group will retain its priority to any
distributions with respect to such assets; in this regard, with respect to any
judgment to avoid the transfer of THL and/or its subsidiaries, neither TAC, New
TAC, the Litigation Trustee(s) nor any Person acting on behalf of TAC, New TAC,
or the Litigation Trustee(s) will be entitled to any distributions from THL or
its subsidiaries until the LoC Bank Group has received payment in full of its
claim for reimbursement or otherwise on account of the LoCs Outstanding, (ii)
TARCO and InsCorp; (iii) any and all present and past officers, directors,
managers, accountants, attorneys and employees of TGL, TAC, and LSH, (iv) any
and all present and past officers, directors, managers, accountants, attorneys
and employees of the predecessors, successors, assigns, parents, subsidiaries
and present and past Affiliates of TGL, TAC, and LSH, (v) Baker & McKenzie and
any of its respective predecessors, successors, assigns, parents, subsidiaries,
present and past Affiliates, and any of their present and past principals,
partners, employees, agents, representatives, consultants, shareholders and
professionals, (vi) Ernst & Young LLP and any of its respective predecessors,
successors, assigns, parents, subsidiaries, present and past Affiliates, and any
of their present and past principals, partners, employees, agents,
representatives, consultants, shareholders and professionals, (vii) Credit
Suisse First Boston and DLJ Capital Funding, Inc. and any and all of their
respective predecessors, successors, assigns, parents, subsidiaries, present and
past Affiliates in their capacity as financial advisors and investment bankers
to TGL, LSH, and TAC, (viii) Credit Suisse First Boston and DLJ Capital Funding,
Inc. and any and all of their respective predecessors, successors, assigns,
parents, subsidiaries, present and past Affiliates in their capacity as
financial advisors and investment bankers to any and all predecessors,
successors, assigns, parents, subsidiaries and present and past Affiliates of
TGL, LSH, and TAC, (ix) any and all financial advisors, investment banks, and
other professionals in their capacities as Persons retained to advise TGL, LSH,
and TAC with respect to acquisitions, mergers, corporate restructurings, and
sales of business lines and entities, (x) any and all financial advisors,
investment banks, and other professionals in their capacities as Persons
retained to advise any and all predecessors, successors, assigns, parents,
subsidiaries, and present and past Affiliates of TGL, LSH, and TAC with respect
to acquisitions, mergers, corporate restructurings, and sales of business lines
and entities. Notwithstanding anything to the contrary in this Plan, each such
Person Excluded From Releases is excluded in any and all capacities, unless
otherwise noted, from any and all releases provided under this Plan. For
14
Trenwick America Corporation
Exhibit 99.1
purposes of this definition, any reference to "and" herein also includes and
refers to "or" to the extent that such an interpretation would expand the scope
of Persons Excluded From Releases.
Section 1.127. Petition Date means August 20, 2003, the date upon which
the Chapter 11 Case was commenced.
Section 1.128. Plan means this Chapter 11 plan of reorganization,
including, without limitation, the exhibits and schedules hereto, as such may be
altered, amended, supplemented or otherwise modified from time to time.
Section 1.129. Plan Proponents has the meaning set forth in the
introductory paragraph hereto.
Section 1.130. Plan Supplement means the supplement to this Plan to be
filed within ten (10) days prior to the deadline established for parties to
submit executed ballots in conjunction with the Confirmation Hearing, which
shall contain, among other things, the following documents in final, or in
substantially final, form: (i) the New Indentures; (ii) the New TAC Bank Escrow
Agreement; (iii) the New TAC Certificate of Formation and New TAC Limited
Liability Company Agreement; (iv) the principal terms of the agreement among TAC
or New TAC, TARCO, InsCorp and the Runoff Manager concerning the Runoff of TARCO
and InsCorp; (v) the Litigation Trust Agreement; (vi) the New Loan Agreement;
and (vii) other material agreements, contracts or documents necessary for the
effectiveness of the Plan.
Section 1.131. Prepetition Claim means any Claim arising on or prior to
the Petition Date.
Section 1.132. Priority Claim means any Claim entitled to priority
pursuant to section 507(a) of the Bankruptcy Code, other than (a) an
Administrative Claim or (b) a Priority Tax Claim.
Section 1.133. Priority Tax Claim means any Claim entitled to priority
pursuant to section 507(a)(8) of the Bankruptcy Code.
Section 1.134. Priority Tax Interest Rate means interest at a fixed annual
rate equal to the rate applicable to underpayments of federal income tax on the
Effective Date (determined pursuant to section 6621 of the Internal Revenue
Code, without regard to subsection (c) thereof), or such lower amount as may be
determined by Final Order of the Bankruptcy Court.
Section 1.135. Pro Rata Amount means with respect to any Debt Payment or
any Trust Payment on any New TAC Debt Security (or any Series thereof) or any
Litigation Trust Certificate, the amount determined by multiplying the aggregate
amount of such Debt Payment or Trust Payment due in respect of all such New TAC
Debt Securities (or Series thereof) or payable on such Litigation Trust
Certificate by a fraction, the numerator of which is the then outstanding
balance of each such New TAC Debt Security or Series thereof or the Litigation
Trust Certificate, and the denominator of which is the then outstanding
principal amount of all such New TAC Debt Securities (or Series thereof).
15
Trenwick America Corporation
Exhibit 99.1
Section 1.136. Pro Rata or Pro Rata Share means, at any time, the
proportionate amount a Claim in a particular Class bears to the aggregate amount
of all Claims (including Disputed Claims) in such Class.
Section 1.137. Professionals means the attorneys, accountants and other
professionals whose retention has been approved by the Bankruptcy Court in the
Chapter 11 Case. (When the term "professionals" is used herein without
capitalization, the term includes attorneys, accountants and other professionals
whether or not such Person's retention has been approved by the Bankruptcy Court
in the Chapter 11 Case.)
Section 1.138. Proof of Claim means a proof of claim Filed in the Chapter
11 Case pursuant to Bankruptcy Rule 3003.
Section 1.139. Proof of Interest means a Proof of equity security interest
Filed in the Chapter 11 Case pursuant to Bankruptcy Rule 3003.
Section 1.140. Quarterly Distribution means the making of Debt Payments or
distributions on New TAC Interests out of Free Cash Flow, if practicable and
required, on a Quarterly Distribution Date to each holder of New TAC Debt
Security or New TAC Interests, as the case may be, as set forth in this Plan.
Section 1.141. Quarterly Distribution Date means the first Business Day
after the end of each calendar quarter (i.e., March 31, June 30, September 30
and December 31 for each calendar year) from and after the Effective Date.
Section 1.142. Reinstated means leaving unaltered the legal, equitable and
contractual rights to which a Claim entitles the holder of such Claim, in
accordance with section 1124 of the Bankruptcy Code.
Section 1.143. Released Parties means, collectively, the Persons receiving
releases pursuant to Section 7.07 herein but in no event includes Persons
Excluded From Releases.
Section 1.144. Residual Trust Certificate means the certificates of
interest in the Litigation Trust to be issued by the Litigation Trust to all
holders of the New TAC Interests. Once issued, the Residual Trust Certificates
cannot be sold, transferred or otherwise disposed of separately from the shares
of the New TAC Interests to which they are attached and relate upon their
initial issuance.
Section 1.145. Restructuring Transactions means, collectively, those
sales, mergers, consolidations, restructurings, dispositions, liquidations or
dissolutions that TAC or New TAC, as the case may be, determines to be necessary
and appropriate to effect a corporate restructuring in accordance with this
Plan.
Section 1.146. Rights Offering means the opportunity provided to each
holder of an Allowed Trust Preferreds Claim that is an Accredited Investor and
is not an Insider of the Debtor to participate as a lender in the New Revolver
Facility and the New Term Loan Facility, which shall serve as an exit facility,
to be made available upon the Effective Date to New TAC and the Litigation Trust
pursuant to the New Loan Agreement.
16
Trenwick America Corporation
Exhibit 99.1
Section 1.147. Runoff means the process whereby an operating insurance
company ceases to actively write any new insurance and/or reinsurance business
(except as may be required by law or contract), but continues to pay its
liabilities as they come due and generate revenues from its existing insurance
business and investment assets.
Section 1.148. Runoff Manager means the Person retained by TAC or New TAC,
as the case may be, TARCO and InsCorp to manage the Runoff of the businesses of
TARCO and InsCorp.
Section 1.149. Schedules means the schedules of assets and liabilities and
the statement of financial affairs, as each may be amended from time to time,
Filed by TAC as required by section 521 of the Bankruptcy Code and Bankruptcy
Rules 1007 and 4002.
Section 1.150. Section 510(b) Claim means a Claim, as described in section
510(b) of the Bankruptcy Code, arising from rescission of a purchase or sale of
a security of the Debtor, for damages arising from the purchase or sale of such
a security, or for reimbursement, indemnification or contribution allowed under
section 502 of the Bankruptcy Code on account of such a Claim.
Section 1.151. Secured Claim means a Claim secured by a Lien on any Asset
of the Debtor, or right of setoff which Lien or right of setoff as the case may
be, is valid, perfected and enforceable under applicable law and is not subject
to avoidance under the Bankruptcy Code or applicable nonbankruptcy law, but only
to the extent of the value, pursuant to section 506(a) of the Bankruptcy Code,
of any interest of the holder of the Claim in property of the Estate securing
such Claim.
Section 1.152. Senior Litigation Trust Certificates means the Litigation
Trust Certificates issued in conjunction with the New Senior Subordinated Notes.
Section 1.153. Senior Noteholders means the legal registered or beneficial
holders of the Senior Notes as of the Effective Date.
Section 1.154. Senior Noteholders Released Parties means each of the
Senior Noteholders and its predecessors, successors, assigns and Affiliates, and
its officers, directors, principals, employees, agents, representatives,
consultants and professionals (but only in their respective capacities as such),
which receive releases to the extent provided herein. Notwithstanding anything
to the contrary herein, the definition of Senior Noteholders Released Parties
shall not include TGL, TAC, LSH or any of their respective predecessors,
successors, assigns, past or present Affiliates, parents, subsidiaries, or any
of the past or present officers, directors or employees of TGL, TAC, LSH or any
of their respective predecessors, successors, assigns, past or present
Affiliates, parents or subsidiaries.
Section 1.155. Senior Notes means the 6.70% Senior Notes, originally due
April 1, 2003, and issued by TGI, on March 24, 1998, as the same have been
subsequently amended, supplemented or otherwise modified from time to time.
Section 1.156. Senior Notes Claim means the Claim arising under the Senior
Notes.
17
Trenwick America Corporation
Exhibit 99.1
Section 1.157. Senior Notes Indenture means that certain Indenture, dated
as of March 27, 1998, between TGI and First National Bank of Chicago with
respect to the Senior Notes, as amended, modified or supplemented from time to
time, among TGI and the Senior Notes Indenture Trustee, and documents or
instruments related thereto.
Section 1.158. Senior Notes Indenture Trustee means The Wilmington Trust
Company, as successor indenture trustee under the Senior Notes Indenture or any
successor indenture trustee thereto.
Section 1.158A. Senior Notes Indenture Trustee Fee means the reasonable
compensation, fees, expenses, disbursements and indemnity claims, including,
without limitation, attorneys' and agents' fees and disbursements, incurred by
the Senior Notes Indenture Trustee.
Section 1.159. Series means with respect to any New Junior Subordinated
Notes, the New TAC Debt Securities that were originally issued in each
respective Class.
Section 1.160. Specified Additional JPMorgan Released Claims means any and
all claims, obligations, suits, judgments, damages, rights, causes of action,
and liabilities whether known or unknown, foreseen or unforeseen, existing or
hereafter arising in law, equity or otherwise (as used herein, "claims") with
respect to any actions or omissions of the JPMorgan Chase Released Parties in
connection with the Senior Notes Indenture or the Trust Preferreds Agreements or
in connection with any JPMorgan Released Party acting in its capacity as a party
to the Senior Notes Indenture or the Trust Preferreds Agreements. Specified
Additional JPMorgan Released Claims shall not include claims against the
JPMorgan Released Parties in any other capacity, and shall not include, for
example, claims against any JPMorgan Released Parties for any contractual
obligations other than contractual obligations released herein or under the
Senior Notes Indenture or the Trust Preferreds Agreements.
Section 1.161. Specified Committee Released Claims means any and all
claims, obligations, suits, judgments, damages, rights, causes of action, and
liabilities whether known or unknown, foreseen or unforeseen, existing or
hereafter arising in law, equity or otherwise with respect to actions or
omissions of the Committee Released Parties in connection with the Chapter 11
Case, those bankruptcy cases filed by TGL and LSH that were jointly administered
with the Chapter 11 Case, or the Plan.
Section 1.162. Specified HSBC Released Claims means any and all claims,
obligations, suits, judgments, damages, rights, causes of action, and
liabilities whether known or unknown, foreseen or unforeseen, existing or
hereafter arising in law, equity or otherwise (as used herein, "claims") with
respect to any actions or omissions of the HSBC Released Parties in connection
with the Trust Preferreds Agreements or in connection with HSBC acting in its
capacity as one or more trustees under the Trust Preferreds Agreements.
Specified HSBC Released Claims shall not include claims against the HSBC
Released Parties in any other capacity, and shall not include, for example,
claims against any HSBC Released Party for any contractual obligations other
than contractual obligations under the Trust Preferreds Agreements.
Section 1.163. Specified LoC Bank Released Claims means any and all
claims, obligations, suits, judgments, damages, rights, causes of action, and
liabilities whether known or
18
Trenwick America Corporation
Exhibit 99.1
unknown, foreseen or unforeseen, existing or hereafter arising in law, equity or
otherwise (as used herein, "claims") with respect to any actions or omissions,
of the LoC Bank Released Parties in connection with the Credit Documents or in
connection with any LoC Bank Released Party acting in any capacity as a party to
the Credit Documents. Specified LoC Bank Released Claims shall not include
claims against the LoC Bank Released Parties in any other capacity, and shall
not include, for example, claims against any LoC Bank Released Party for any
contractual obligations with the Debtor or the Estate other than contractual
obligations under the Credit Documents.
Section 1.164. Specified Magicsunny Released Claims means those claims,
obligations, suits, judgments, damages, rights, causes of action, and
liabilities directly arising from those specific acts, and only such specific
acts, that directly pertain to the formation of, operation of, or transactions
by Magicsunny only to the extent that such acts occurred on or before August 6,
2003.
Section 1.165. Specified Senior Noteholders Released Claims means any and
all claims, obligations, suits, judgments, damages, rights, causes of action,
and liabilities whether known or unknown, foreseen or unforeseen, existing or
hereafter arising in law, equity or otherwise (as used herein, "claims") (i)
with respect to any actions or omissions of the Senior Noteholders Released
Parties in connection with the Senior Note Indenture or other documents defining
or establishing the rights or obligations of the Senior Noteholders, or (ii) in
connection with any Senior Noteholders Released Party acting in its capacity as
a legal, registered, and/or beneficial holder of one or more of the Senior
Notes. Specified Senior Noteholders Released Claims shall not include claims
against the Senior Noteholders Released Parties in any other capacity, and shall
not include, for example, claims against any Senior Noteholders Released Parties
for any contractual obligations other than contractual obligations under the
Senior Notes Indenture or other documents defining or establishing the rights or
obligations of the Senior Noteholders.
Section 1.166. Specified Trust Preferreds Released Claims means any and
all claims, obligations, suits, judgments, damages, rights, causes of action,
and liabilities whether known or unknown, foreseen or unforeseen, existing or
hereafter arising in law, equity or otherwise (as used herein, "claims") (i)
with respect to any actions or omissions of the Trust Preferreds Released
Parties in connection with the Trust Preferreds Agreements or other documents
defining or establishing the rights or obligations of the Trust Preferreds
Securities Holders, or (ii) in connection with any Trust Preferreds Released
Party acting in its capacity as a legal, registered, and/or beneficial holder of
one or more of the Trust Preferreds Securities. Specified Trust Preferreds
Released Claims shall not include claims against the Trust Preferreds Released
Parties in any other capacity, and shall not include, for example, claims
against any Trust Preferreds Released Parties for any contractual obligations
other than contractual obligations under the Trust Preferreds Agreements or
other documents defining or establishing the rights or obligations of the Trust
Preferreds Securities Holders.
Section 1.167. Specified Wilmington Released Claims means any and all
claims, obligations, suits, judgments, damages, rights, causes of action, and
liabilities whether known or unknown, foreseen or unforeseen, existing or
hereafter arising in law, equity or otherwise (as used herein, "claims") with
respect to any actions or omissions of the Wilmington Released Parties in
connection with the Senior Notes Indenture or in connection with Wilmington
acting in
19
Trenwick America Corporation
Exhibit 99.1
its capacity as the Senior Notes Indenture Trustee. Specified Wilmington
Released Claims shall not include claims against the Wilmington Released Parties
in any other capacity, and shall not include, for example, claims against any
Wilmington Released Party for any contractual obligations other than contractual
obligations under the Senior Notes Indenture.
Section 1.168. Standby Purchasers means, collectively, John J. Gorman,
Phoenix Partners, L.P., Phoenix Partners II, L.P., Phaeton International (BVI),
Ltd. and John C. Waterfall.
Section 1.169. Subordinated Note Series B Percentage means, with respect
to any applicable Debt Payment or Trust Payment in respect of the New Junior
Subordinated Notes or the Junior Litigation Trust Certificates, the percentage
obtained by multiplying the amount equal to the difference of 1.10 (being 110%)
minus the Subordinated Note InsCorp Percentage.
Section 1.170. Subordinated Note InsCorp Percentage means, with respect to
any applicable Debt Payment or Trust Payment in respect of the New Junior
Subordinated Notes or the Junior Litigation Trust Certificates (a) until the New
Series A Junior Subordinated Notes have been paid in full, the lesser of (i) the
percentage equal to the sum of (A) the amount equal to (1) the then aggregate
outstanding amount of all New Series A Junior Subordinated Notes divided by (2)
the then aggregate outstanding amount of all New Junior Subordinated Notes plus
(B) .10 and (ii) such lesser percentage as will result in the New Series A
Junior Subordinated Notes being paid in full, and (b) thereafter, 0%.
Section 1.171. TAC means Trenwick America Corporation.
Section 1.172. TASCO means the new operational subsidiary of TARCO, which
will maintain responsibility for the operations of InsCorp and TARCO.
Section 1.173. TARCO means Trenwick America Reinsurance Corporation, a
Connecticut insurance company and the only active direct wholly owned subsidiary
of TAC.
Section 1.174. TGI means Trenwick Group, Inc.
Section 1.175. TGL means Trenwick Group Ltd., a Bermuda company currently
in provisional liquidation, and the indirect holder of 100% of the outstanding
shares of stock of TAC.
Section 1.176. Treasury Regulation means those regulations promulgated
pursuant to the Internal Revenue Code of 1986, as amended.
Section 1.177. Trenwick (Barbados) means Trenwick (Barbados) Limited, a
wholly owned subsidiary of TGL.
Section 1.178. Trust Beneficiaries means the holders of Trust
Certificates.
Section 1.179. Trust Certificates means collectively the Litigation Trust
Certificates and the Residual Trust Certificates.
Section 1.180. Trust Interests means the beneficial interests in the
Litigation Trust.
20
Trenwick America Corporation
Exhibit 99.1
Section 1.181. Trust Payments means the payments made by the Litigation
Trustee(s) from the Litigation Trust to the holders of Trust Certificates on
account of such Trust Certificates in accordance with the Litigation Trust
Agreement.
Section 1.182. Trust Preferreds means the 8.82% Junior Subordinated
Deferrable Interest Debentures issued by TAC pursuant to the Trust Preferreds
Indentures.
Section 1.183. Trust Preferreds Agreements means collectively the Trust
Preferreds Indentures, the Trust Preferreds Trust Agreement, and that certain
Capital Securities Guarantee Agreement, dated as of January 31, 1997, as the
same may have been subsequently replaced, amended, supplemented or otherwise
modified, from time to time.
Section 1.184. Trust Preferreds Claim means all amounts owing by TAC to
the Trust Preferreds under the Trust Preferreds Agreements.
Section 1.185. Trust Preferreds Indentures means collectively that certain
Indenture, dated as of January 31, 1997 between TGI and The Chase Manhattan Bank
with respect to the 8.82% Junior Subordinated Deferrable Interest Debentures, as
amended, modified or supplemented from time to time, and any other documents or
instruments related thereto, and the First Supplemental Indenture, dated as of
September 27, 2000 among TGI, TAC and The Chase Manhattan Bank.
Section 1.186. Trust Preferreds Indenture Trustee means HSBC Bank USA, as
successor trustee under the Trust Preferreds Indentures, or any successor
trustee thereto.
Section 1.186A. Trust Preferreds Indenture Trustee Fee means the
reasonable compensation, fees, expenses, disbursements and indemnity claims,
including, without limitation, attorneys' and agents' fees and disbursements,
incurred by the Trust Preferreds Indenture Trustee.
Section 1.187. Trust Preferreds Released Parties means each of the Trust
Preferreds Securities Holders and its predecessors, successors, assigns and
Affiliates and its officers, directors, principals, employees, agents,
representatives, consultants and professionals (but only in their respective
capacities as such), which receive releases to the extent provided herein.
Notwithstanding anything to the contrary herein, the definition of Trust
Preferreds Released Parties shall not include James F. Billet, Jr., Alan L.
Hunte and Jane T. Wiznitzer, or any Administrative Trustees of the Trust
Preferred Trust Agreement, TGL, TAC, LSH or any of their respective
predecessors, successors, assigns, past or present Affiliates, parents,
subsidiaries, or any of the past or present officers, directors or employees of
TGL, TAC, LSH or any of their respective predecessors, successors, past or
present Affiliates, parents or subsidiaries.
Section 1.188. Trust Preferreds Securities means (i) the 8.82% Junior
Subordinated Deferrable Interest Debentures issued pursuant to the Trust
Preferreds Indentures and/or (ii) any form of capital securities issued pursuant
to the Trust Preferreds Trust Agreement.
Section 1.189. Trust Preferreds Securities Holders means (i) the
beneficial holders of the 8.82% Junior Subordinated Deferrable Interest
Debentures issued pursuant to the Trust
21
Trenwick America Corporation
Exhibit 99.1
Preferreds Indenture and/or (ii) the legal, registered or beneficial holders of
any form of capital securities issued pursuant to the Trust Preferreds Trust
Agreement, each as of the Effective Date.
Section 1.190. Trust Preferreds Trust Agreement means that certain
Trenwick Capital Trust I Amended and Restated Declaration of Trust dated as of
January 31, 1997, as the same may have been subsequently amended, supplemented
or otherwise modified from time to time among TGI, as Sponsor, Chase Manhattan
Bank, as predecessor Property Trustee and Delaware Trustee, and James F. Billet,
Jr., Alan L. Hunte and Jane T. Wiznitzer, as Administrative Trustee.
Section 1.191. U.K. means the United Kingdom.
Section 1.192. Unclaimed Holders shall have the meaning ascribed in
Section 6.19(b) hereof.
Section 1.193. Unclaimed Property means any distributions other than
payments to holders of Senior Notes Claim and the LoC Bank Group Claim unclaimed
on or after the applicable Initial Distribution Date or the date on which an
additional Quarterly Distribution would have been made in respect of the
relevant Allowed Claim. Unclaimed Property shall include: (a) checks (and the
funds represented thereby), New TAC Securities (i) mailed to a Distribution
Address and returned as undeliverable without a proper forwarding address or
(ii) not mailed or delivered because no Distribution Address to mail or deliver
such property was available, and (b) funds for checks delivered but uncashed
within one year of the Effective Date.
Section 1.194. U.S. means the United States of America.
Section 1.195. U.S. Trustee Fees means all fees and charges assessed
against the Estate by the United States Trustee and due pursuant to section 1930
of title 28 of the United States Code.
Section 1.196. Wilmington means Wilmington Trust Company, as trustee under
the Senior Notes Indenture.
Section 1.197. Wilmington Released Parties means Wilmington and its
successors, assigns, Affiliates, and its officers, directors, principals,
employees, agents, representatives, consultants and professionals (but only in
their respective capacities as such), which receive releases to the extent
provided herein.
B. Interpretation, Application of Definitions and Rules of Construction.
Section 1.198. Generally. For purposes of the Plan, (a) any reference in
the Plan to an existing document or Exhibit Filed or to be Filed means such
document or Exhibit as it may have been or may be amended, modified or
supplemented; (b) unless otherwise specified, all references in the Plan to
Sections, Articles and Exhibits are references to Sections, Articles and
Exhibits of, or to, the Plan, as the case may be; and (c) the rules of
construction set forth in section 102 of the Bankruptcy Code and in the
Bankruptcy Rules shall apply unless superseded herein or in the Confirmation
Order.
22
Trenwick America Corporation
Exhibit 99.1
Section 1.199. Exhibits. All Exhibits are incorporated into and are a part
of the Plan as if set forth in full herein. Copies of Exhibits, after being
Filed, can be obtained upon written request to Weil, Gotshal & Manges LLP, 200
Crescent Court, Suite 300, Dallas, TX 75201 (Attn: Martin A. Sosland and Stephen
A. Youngman), counsel to the Plan Proponents.
Section 1.200. Computation of Time Periods. In computing any period of
time prescribed or allowed by the Plan, the provisions of Bankruptcy Rule
9006(a) shall apply.
Section 1.201. Miscellaneous Rules. (i) The words "herein," "hereof,"
"hereunder," and other words of similar import refer to this Plan as a whole,
not to any particular Section, subsection, or clause, unless the context
requires otherwise; (ii) whenever it appears appropriate from the context, each
term stated in the singular or the plural includes the singular and the plural,
and each pronoun stated in the masculine, feminine or neuter includes the
masculine, feminine and the neuter; (iii) captions and headings to Articles and
Sections of the Plan are inserted for convenience or reference only and are not
intended to be a part or to affect the interpretation of the Plan; and (iv) any
term used in the Plan but not defined herein that is used in the Bankruptcy Code
or Bankruptcy Rules shall have the meaning assigned to that term in the
Bankruptcy Code or Bankruptcy Rules.
ARTICLE II.
GENERAL RULES
REGARDING CLASSIFICATION
OF CLAIMS AND INTERESTS
Section 2.01. General Rules of Classification Under the Bankruptcy Code.
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims and Priority Tax Claims have not been classified and, thus, are excluded
from the Classes as set forth below. All other Claims and Interests have been
classified set forth below.
A Claim or Interest is classified in a particular Class only to the extent
that the Claim or Interest falls within the description of that Class and is
classified in other Class(es) to the extent that any portion of the Claim or
Interest falls within the description of such other Class(es).
A Claim is also placed in a particular Class for the purpose of receiving
distributions pursuant to the Plan only to the extent that such Claim is an
Allowed Claim in that Class and such Claim has not been paid, released, or
otherwise settled prior to the Effective Date.
Section 2.02. Undersecured Claims. To the extent that the amount of an
Allowed Claim is greater than the value of the Collateral securing such Claim as
of the applicable valuation date (assuming the value of such Collateral is
greater than $0), subject to section 1111(b) of the Bankruptcy Code, such Claim
is classified in both Classes of Other Secured Claims for the secured portion of
such Claim and the class of General Unsecured Claims for the excess of such
Claim over the value of the Collateral. Notwithstanding anything to the contrary
herein, absent an order of the Bankruptcy Court or agreement fixing the Allowed
amount of a Secured Claim or the scheduling of such Claim as liquidated,
nondisputed and noncontingent on the Debtor's
23
Trenwick America Corporation
Exhibit 99.1
Schedules, the Plan Proponents are not bound by a classification made or implied
herein with respect to any particular Claim.
ARTICLE III.
CLASSIFICATION OF CLAIMS AND INTERESTS
Section 3.01. Summary. Claims, other than Administrative Claims and
Priority Tax Claims, are classified for all purposes, including voting,
confirmation, and distribution, as follows:
Class 1: Class 1 consists of Secured Claims
Class 2: Class 2 consists of all Priority Claims
Class 3: Class 3 consists of the LoC Bank Group Claim
Class 4: Class 4 consists of the Senior Notes Claim
Class 5: Class 5 consists of the InsCorp Claim
Class 6: Class 6 consists of all CI Notes Claim
Class 7: Class 7 consists of all General Unsecured Claims
Class 8: Class 8 consists of all Convenience Claims
Class 9: Class 9 consists of the Trust Preferreds Claim
Class 10: Class 10 consists of the Other Intercompany Claims
Class 11: Class 11 consists of the Section 510(b) Claims
Class 12: Class 12 consists of Interests in the Debtor.
ARTICLE IV.
TREATMENT OF UNCLASSIFIED CLAIMS
Section 4.01. Administrative Claims. Subject to the Bar Date provisions
herein, sections 328, 330(a) and 331 of the Bankruptcy Code and Section 11.04(b)
hereof (relating to Professionals' requests for compensation and reimbursement
of expenses), each holder of an Allowed Administrative Claim shall receive in
full satisfaction of such Administrative Claim, Cash, in an amount equal to such
Allowed Administrative Claim: (i) on the Initial Distribution Date, or as soon
thereafter as is practicable, (ii) if such Administrative Claim is Allowed after
the Initial Distribution Date, within ten (10) days following the date that such
Administrative Claim is Allowed or as soon as practicable thereafter, or (iii)
upon such other terms as may be agreed upon by the holder of such Allowed
Administrative Claim and the Plan Proponents in consultation with the Creditors'
Committee, or New TAC; provided, however, that Allowed
24
Trenwick America Corporation
Exhibit 99.1
Administrative Claims representing obligations incurred in the ordinary course
of business or otherwise assumed by the Debtor pursuant to the Plan will be
assumed on the Effective Date and paid or performed by New TAC when due in
accordance with the terms and conditions of the particular agreements governing
such obligations.
Section 4.02. Priority Tax Claims. Except to the extent the holder of an
Allowed Priority Tax Claim has been paid by the Debtor prior to the Effective
Date or agrees to a different treatment, each holder of an Allowed Priority Tax
Claim shall receive, at the sole option of New TAC, (a) Cash in an amount equal
to such Allowed Priority Tax Claim on the later of the Initial Distribution Date
and the date such Priority Tax Claim becomes an Allowed Priority Tax Claim, or
as soon thereafter as is practicable, or (b) equal annual Cash payments in an
aggregate amount equal to such Allowed Priority Tax Claim, together with
interest at the Priority Tax Interest Rate per annum, or such other rate
determined by the Bankruptcy Court, on the unpaid portion of such Allowed
Priority Tax Claim, over a period not exceeding six (6) years from the date of
assessment of such Allowed Priority Tax Claim. Each Priority Tax Claim which is
not payable on or before the Effective Date will survive confirmation of the
Plan, remain unaffected thereby, and be paid as and when due by New TAC, except
to the extent that a holder of such Claim agrees to a different treatment.
Section 4.03. U.S. Trustee Fees. The Debtor, or New TAC, as the case may
be, shall pay all U.S. Trustee Fees payable under Section 1930 of title 28 as
determined by the Court on confirmation, and, thereafter, when due until such
time as the Bankruptcy Court enters a final decree closing the Chapter l1 Case.
Section 4.04. Review of Indenture Trustee Fees. Within ten (10) days after
the Confirmation Date, each Indenture Trustee, agent or servicer shall be
required to provide the Plan Proponents with copies of invoices reflecting its
fees and expenses for review. In the event the parties cannot reach an agreement
on the reasonableness of any requested amount, any disputed amount shall be
determined upon application by the applicable Indenture Trustee, to the
Bankruptcy Court subject to a "reasonableness" standard. All undisputed amounts
shall be paid, pursuant to Sections 5.04, 5.05, and 5.09 hereof, as applicable.
The Indenture Trustees shall retain all charging liens on distributions under
the Plan until receipt of payment in Cash of the Indenture Trustees' fees and
expenses, including the fees and disbursements of counsel as determined pursuant
to this Section 4.04. Notwithstanding the foregoing, to the extent any Indenture
Trustee provides services related to distributions pursuant to the Plan, each
Indenture Trustee shall be entitled to receive from New TAC, without further
court approval, reasonable compensation for such services and reimbursement of
reasonable expenses incurred in connection with such services, with such payment
made on terms as agreed to between such Indenture Trustee and New TAC; provided,
however, that if a dispute arises with respect to such compensation and
expenses, such dispute will be resolved by the Bankruptcy Court.
Section 4.05. MBIA Fees. In full satisfaction of the fees and expenses
incurred in connection with the Chapter 11 Case, MBIA shall receive from New TAC
on the Effective Date, or as soon as practicable thereafter, Cash in the amount
of actual fees and expenses incurred by MBIA on and after April 1, 2004 through
the Effective Date without the necessity of further Court order, unless the
Court orders otherwise. The payment of fees and expenses under this Section 4.05
is part of the overall settlement embodied in this Plan.
25
Trenwick America Corporation
Exhibit 99.1
Section 4.06. Plan Proponents Fees. In full satisfaction of the fees and
expenses incurred in connection with the Chapter 11 Case, the Plan Proponents
shall receive from New TAC on the Effective Date, or as soon as practicable
thereafter, Cash in the amount of actual fees and expenses incurred by the Plan
Proponents on and after March 1, 2004 through the Effective Date without the
necessity of further Court order, unless the Court orders otherwise. The payment
of fees and expenses under this Section 4.06 is part of the overall settlement
embodied in this Plan.
Section 4.07. LoC Bank Group Fees. In accordance with the Letter of
Intent, the LoC Bank Group shall be entitled to retain all sums advanced to the
LoC Bank Group from non-Debtor funds prior to the Petition Date pursuant to the
Letter of Intent on account of legal and other costs of the LoC Bank Group and
as a part of the overall settlement embodied in this Plan, including $2,500,000
incurred in relation to the transactions contemplated by the Letter of Intent
after June 30, 2003.
ARTICLE V.
TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS
Section 5.01. Class 1: Secured Claims.
(a) Distributions. Except to the extent that a holder of an Allowed
Secured Claim agrees to a different treatment, in full and final satisfaction of
such Claim, each Allowed Secured Claim (at the sole option of New TAC) (i) shall
be Reinstated and rendered unimpaired in accordance with section 1124(2) of the
Bankruptcy Code, notwithstanding any contractual provision or other applicable
nonbankruptcy law that entitles the holder of an Allowed Secured Claim to demand
or receive payment of such Allowed Secured Claim prior to the stated maturity of
such Allowed Secured Claim from and after the occurrence of a default, or (ii)
each holder of an Allowed Secured Claim shall receive Cash in an amount equal to
such Allowed Secured Claim, including any interest on such Allowed Secured Claim
required to be paid pursuant to section 506(b) of the Bankruptcy Code, on the
later of the Initial Distribution Date and the date such Allowed Secured Claim
becomes an Allowed Secured Claim.
(b) Impairment and Treatment. Class 1 shall be unimpaired under the
Plan. The holders of Allowed Claims in Class 1 are presumed to accept the Plan
and are not entitled to vote to accept or reject the Plan.
Section 5.02. Class 2: Priority Claims.
(a) Distributions. Except to the extent that a holder of an Allowed
Priority Claim agrees to a different treatment, in full and final satisfaction
of such Claim, each Allowed Priority Claim shall receive (at the sole option of
New TAC) Cash in an amount equal to such Allowed Priority Claim, on the later of
the (i) Initial Distribution Date and (ii) the date such Priority Claim becomes
an Allowed Priority Claim, or as soon thereafter as is practicable.
(b) Impairment and Voting. Class 2 shall be unimpaired under the
Plan. The holders of Allowed Claims in Class 2 are presumed to accept the Plan
and are not entitled to vote to accept or reject the Plan.
26
Trenwick America Corporation
Exhibit 99.1
Section 5.03. Class 3: LoC Bank Group Claim.
(a) Distributions. Except to the extent that a holder of an Allowed
LoC Bank Group Claim agrees to a different treatment, in full and final
satisfaction of such Claim, on the Initial Distribution Date, each holder of an
Allowed LoC Bank Group Claim shall receive its Pro Rata Share of New Series B
Junior Subordinated Notes to be issued in the aggregate Face Amount of
$19,505,000 and Junior Litigation Trust Certificates entitling the holders of
Allowed LoC Bank Group Claims the right to receive, in the aggregate, the LoC
Bank Group's Maximum Claim in respect of such New Series B Junior Subordinated
Notes and Junior Litigation Trust Certificates; provided, however, that (i) such
New Series B Junior Subordinated Notes and Junior Litigation Trust Certificates
shall be deposited by the LoC Bank Group with New TAC Escrow Agent and (ii) any
Debt Payments and Trust Payments due the LoC Bank Group with respect thereto
shall be deposited by New TAC, on behalf of the LoC Bank Group, into the New TAC
Bank Group Escrow on each Quarterly Distribution Date on which a distribution is
made on the New Series B Subordinated Junior Notes and the Junior Litigation
Trust Certificates. On the Business Day following a LoC Claim Date, the New TAC
Escrow Agent shall distribute, to the extent available under the terms of the
New TAC Escrow Agreement, an amount equal to the amount of any draws on letters
of credit pursuant to the Letter of Credit Facility which have been drawn and
not previously reimbursed hereunder on or before on such LoC Claim Date. The
Escrow Excess Amount, if any, shall be returned to New TAC after the Final LoC
Claim Date and shall constitute Available Cash, which shall be distributed in
accordance with the Plan.
(b) The Allowed LoC Bank Group Claim shall be reduced and offset by
the amount of any funds received by the LoC Bank Group either directly or
indirectly on account of the Prepetition Claim of Trenwick (Barbados), including
but not limited to, distributions on account thereof. Furthermore, any such
funds shall be deposited by the LoC Bank Group with the New TAC Escrow Agent
into the New TAC Bank Group Escrow and thereby become subject to the New TAC
Escrow Agreement. Such funds shall be distributed from the New TAC Bank Group
Escrow in accordance with the same priorities and on the same terms provided in
the Plan, with the exception that Trenwick (Barbados) shall not be entitled to
receive any distributions from the funds released from New TAC Bank Group
Escrow.
(c) Within ten (10) Business Days after receiving of notice thereof,
the LoC Bank Group Administrative Agent shall notify New TAC to the extent any
LoC Outstanding has expired or has been drawn upon or has been released.
Additionally, post-confirmation, the LoC Bank Group Administrative Agent shall
provide a semi-annual report of LoCs Outstanding to New TAC.
(d) Allowance of Claims Impairment and Voting. In accordance with
the LoC Bank Group Settlement, the LoC Bank Group Claim is Allowed in the amount
of $19,505,000, without offset, defense or counterclaim and shall not be subject
to objection, subordination, recharacterization or any claim under chapter 5 of
the Bankruptcy Code. Class 3 is impaired under the Plan. Holders of Allowed
Claims in Class 3 are entitled to vote to accept or reject the Plan.
27
Trenwick America Corporation
Exhibit 99.1
Section 5.04. Class 4: Senior Notes Claim.
(a) Distributions. Except to the extent that a holder of an Allowed
Claim in Class 4 agrees to a different treatment, in full and final satisfaction
of such Allowed Claim, each holder of an Allowed Claim in Class 4 shall receive
its Pro Rata Share of (i) New Senior Subordinated Notes in aggregate Face Amount
of $35,000,000 and Senior Litigation Trust Certificates entitling the holders of
Allowed Senior Note Claims to receive an aggregate of $35,000,000 in respect of
such New Senior Subordinated Notes and Senior Litigation Trust Certificates, and
(ii) New Series B Junior Subordinated Notes in the aggregate Face Amount of
$41,945,161.29 and Junior Litigation Trust Certificates entitling the holders of
Allowed Senior Note Claims to receive an aggregate of $41,945,161.29 in respect
of such New Series B Junior Subordinated Notes and Junior Litigation Trust
Certificates. Holders of Allowed Claims in Class 4 shall also receive on the
Initial Distribution Date, Cash in the amount of the Senior Notes Indenture
Trustee Fee, which Cash shall be paid directly to the Senior Notes Indenture
Trustee on the Initial Distribution Date, provided, however, that the Senior
Notes Indenture Trustee shall be required to comply with Section 4.04 hereof in
determining the reasonableness of the amount of the Senior Notes Indenture
Trustee Fee.
(b) Allowance of Claims, Impairment and Voting. The Senior Notes
Claim shall be an Allowed Claim for all purposes relating to the Chapter 11 Case
in the aggregate amount of $76,945,161.29, without offset, defense or
counterclaim and shall not be subject to objection, subordination,
recharacterization or any claim under chapter 5 of the Bankruptcy Code. Class 4
is impaired under the Plan. The holders of Allowed Claims in Class 4 are
entitled to vote to accept or reject the Plan.
Section 5.05. Class 5: InsCorp Claim.
(a) Distributions. Except to the extent that the holder of an
Allowed Claim in Class 5 agrees to a different treatment, in full and final
satisfaction of such Allowed Claim, the holder of an Allowed Claim in Class 5
shall receive (i) New Senior Subordinated Notes in the aggregate Face Amount of
$16,764,306.00 and Senior Litigation Trust Certificates entitling the holder of
an Allowed InsCorp Claim to receive an aggregate amount of $16,764,306.00 in
respect of such New Senior Subordinated Notes and Senior Litigation Trust
Certificates and (ii) New Series A Junior Subordinated Notes in the aggregate
Face Amount of $9,535,694.00 and Junior Litigation Trust Certificates entitling
the holder of an Allowed InsCorp Claim to receive an aggregate amount of
$9,535,694.00 in respect of such New Series A Junior Subordinated Notes and
Junior Litigation Trust Certificates. New TAC Debt Securities distributed to
InsCorp on the Initial Distribution Date will be exchanged for modified New TAC
Debt Securities in accordance with the calculation of the Subordinated Note
InsCorp Percentage, to the extent the Prepetition Claim of Trenwick (Barbados),
which is contained in Class 10 as an Other Intercompany Claims, is not reduced
or disallowed.
(b) Allowance of Claims, Impairment and Voting. The InsCorp Claim is
Allowed in the amount of $26,300,000. The holder of an Allowed Claim in Class 5
is entitled to vote to accept or reject the Plan.
28
Trenwick America Corporation
Exhibit 99.1
Section 5.06. Class 6: CI Notes Claim.
(a) Distributions. Except to the extent that a holder of an Allowed
Claim in Class 6 agrees to a different treatment, in full and final satisfaction
of such Allowed Claim, each holder of an Allowed Claim in Class 6 shall receive
its Pro Rata Share of (i) New Senior Subordinated Notes in the aggregate Face
Amount of $821,963.30 and Senior Litigation Trust Certificates entitling the
holders of Allowed CI Notes Claims to receive an aggregate amount of $821,963.30
in respect of such New Senior Subordinated Notes and Senior Litigation Trust
Certificates and (ii) New Series B Junior Subordinated Notes and Junior
Litigation Trust Certificates entitling the holders of Allowed CI Note Claims to
receive an aggregate of $984,946.70 in respect of such New Series B Junior
Subordinated Notes and Junior Litigation Trust Certificates; provided, however,
that notwithstanding the foregoing, as a sub-Class of Class 6, each holder of an
Allowed CI Notes Claim of less than $1,000.00 shall receive, in full and final
satisfaction of such Allowed Claim, Cash in an amount equal to such Allowed
Claim. Holders of Allowed Claims in Class 6 shall also receive on the Initial
Distribution Date, Cash in the amount of the CI Notes Indenture Trustee Fee,
which Cash shall be paid directly to the CI Notes Indenture Trustee on the
Initial Distribution Date, provided, however, that the CI Notes Indenture
Trustee shall be required to comply with Section 4.04 hereof in determining the
reasonableness of the amount of the CI Notes Indenture Trustee Fee.
(b) Allowance of Claims, Impairment and Voting. The CI Notes Claim
is Allowed in the amount of $1,806,910. Class 6 is impaired under the Plan. The
holders of Allowed Claims in Class 6 are entitled to vote to accept or reject
the Plan.
Section 5.07. Class 7: General Unsecured Claims.
(a) Distributions. Except to the extent that a holder of an Allowed
Claim in Class 7 agrees to a different treatment (including electing to convert
its General Unsecured Claim to a Convenience Claim), in full and final
satisfaction of such Allowed Claim, each holder of an Allowed Claim in Class 7
shall receive its Pro Rata Share of (i) New Senior Subordinated Notes and Senior
Litigation Trust Certificates entitling the holder of an Allowed General
Unsecured Claim to receive an aggregate amount of forty-five percent (45%) of
its Allowed Claim and (ii) New Series B Junior Subordinated Notes and Junior
Litigation Trust Certificates entitling each holder of an Allowed General
Unsecured Claim to receive an aggregate amount of fifty-five percent (55%) of
its Allowed Claim.
(b) Impairment and Voting. Class 7 is impaired under the Plan. The
holders of Allowed Claims in Class 7 are entitled to vote to accept or reject
the Plan.
Section 5.08. Class 8: Convenience Claims.
(a) Distributions. In full and final satisfaction of such Claim,
each holder of an Allowed Convenience Claim shall be paid 100% of its Allowed
Convenience Claim (as reduced in accordance with Section 6.34 of the Plan),
without interest, in Cash.
(b) Impairment and Voting. Class 8 is impaired under the Plan.
Holders of such Claims are entitled to vote to accept or reject the Plan.
29
Trenwick America Corporation
Exhibit 99.1
Section 5.09. Class 9: Trust Preferreds Claim.
(a) Distributions. Except to the extent that a holder of an Allowed
Trust Preferreds Claim agrees to a different treatment, in full and final
satisfaction of such Allowed Trust Preferreds Claim, each holder of an Allowed
Trust Preferreds Claim shall receive its Pro Rata Share of (i) New TAC
Interests, subject to dilution by the exercise of any conversion of the New Term
Loan Facility into up to ninety percent (90%) of the fully diluted New TAC
Interests and (ii) Residual Trust Certificates. Holders of Allowed Claims in
Class 9 shall also receive on the Initial Distribution Date, Cash in the amount
of the Trust Preferreds Indenture Trustee Fee, which Cash shall be paid directly
to the Trust Preferreds Indenture Trustee on the Initial Distribution Date,
provided, however, that the Trust Preferreds Indenture Trustee shall be required
to comply with Section 4.04 hereof in determining the reasonableness of the
amount of the Trust Preferreds Indenture Trustee Fee.
(b) Allowance of Claims, Impairment and Voting. The Trust Preferreds
Claim is Allowed in the amount of $124,201,169.49, without offset, defense or
counterclaim and shall not be subject to objection, subordination,
recharacterization or any claim under chapter 5 of the Bankruptcy Code. Class 9
is impaired under the Plan. The holders of Allowed Claims in Class 9 are
entitled to vote to accept or reject the Plan.
Section 5.10. Class 10: Other Intercompany Claims.
(a) Distributions. Except to the extent that a holder of an Allowed
Claim in Class 10 agrees to a different treatment, in full and final
satisfaction of such Allowed Claim, each holder of an Allowed Claim in Class 10
shall receive its Pro Rata Share of (i) New Senior Subordinated Notes and Senior
Litigation Trust Certificates entitling the holder of an Allowed Other
Intercompany Claim to receive an aggregate amount of forty-five percent (45%) of
its Allowed Claim and (ii) New Series B Junior Subordinated Notes and Junior
Litigation Trust Certificates entitling each holder of an Allowed Other
Intercompany Claim to receive an aggregate amount of fifty-five percent (55%) of
its Allowed Claim.
(b) Impairment and Voting. The Prepetition Claim of TARCO is Allowed
in the aggregate amount of $33,300,000.00. The Prepetition Claim of Trenwick
(Barbados) is not Allowed under the Plan. The holders of Allowed Claims in Class
10 are entitled to vote to accept or reject the Plan.
Section 5.11. Class 11: Section 510(b) Claims.
(a) Distributions. Holders of Allowed Claims in Class 11 shall not
receive any distribution under the Plan.
(b) Impairment and Voting. Class 11 is impaired. Holders of Class 11
Claims shall be deemed to have rejected the Plan.
30
Trenwick America Corporation
Exhibit 99.1
Section 5.12. Class 12: Old Common Stock.
(a) Distributions. On the Effective Date, all Old Common Stock shall
be cancelled and extinguished and the holder thereof shall not receive any
distribution under the Plan.
(b) Impairment and Voting. Class 12 is impaired. Holders of Class 12
Interests shall be deemed to have rejected the Plan.
ARTICLE VI.
MEANS FOR IMPLEMENTING THE PLAN
Section 6.01. Managers of New TAC. Commencing on the Effective Date, the
New TAC Limited Liability Company Agreement shall provide that the management of
New TAC shall be at the direction of the board of managers of New TAC, which
board shall consist of up to nine (9) persons, including (i) two (2) managers to
be designated by the Plan Proponents in consultation with MBIA and the LoC Bank
Group, each of whom is not a Plan Proponent or an officer, director, employee or
Affiliate of a Plan Proponent or New TAC; (ii) five (5) additional managers to
be designated by the Plan Proponents at their sole discretion; (iii) one (1)
additional manager to be designated by the LoC Bank Group so long as the LoC
Bank Group holds any New TAC Debt Securities and (iv) one (1) additional manager
to be designated by MBIA so long as it holds any New TAC Debt Securities. The
names of the managers shall be disclosed prior to the Confirmation Hearing and
set forth in the Plan Supplement. The managers of New TAC shall serve for five
(5) years and can only be removed in accordance with the terms of the New TAC
Certificate of Formation and the New TAC Limited Liability Company Agreement.
During such initial five-year period, in the event that any manager resigns or
is unable to perform the duties of a manager, the remaining New TAC managers
shall appoint a new manager so long as the appointment of such new manager is
consented to by the party or constituency, in its sole discretion, that
originally designated the resigning manager.
Section 6.02. New TAC Certificate of Formation and Limited Liability
Company Agreement.
The adoption of the New TAC Certificate of Formation and New TAC Limited
Liability Company Agreement will be deemed to have occurred and be effective as
of the Effective Date without any further action by the managers or interest
holders of New TAC. The New TAC Certificate of Formation and/or Limited
Liability Company Agreement will, among other things, contain appropriate
provisions (i) governing the authorization and issuance of the New TAC
Securities, (ii) prohibiting the issuance of nonvoting membership interests as
required by section 1123(a)(6) of the Bankruptcy Code, (iii) providing that New
TAC may not file a voluntary bankruptcy petition absent the affirmative vote of
at least seven (7) of the members of the board of directors, and (iv)
implementing such other matters as the managers of New TAC believe are necessary
and appropriate to effectuate the terms and conditions of the Plan. On or prior
to the Effective Date, the New TAC Certificate of Formation shall be filed with
the Secretary of State of the State of Delaware, in accordance with section
18-201 of the Delaware Limited Liability Company Act. The New TAC Certificate of
Formation shall be substantially in the form
31
Trenwick America Corporation
Exhibit 99.1
contained in the Plan Supplement. New TAC will elect to be treated as a
corporation for federal income tax purposes.
Section 6.03. Establishment and Funding of the Litigation Trust. Upon the
determination of the Plan Proponents, but in no event later than the Effective
Date, the Litigation Trust may be formed. The Litigation Trust, if formed, shall
be a statutory trust that shall be deemed a resident of the state in which it is
formed as of the Effective Date. On the Effective Date, the Litigation Trust
shall be funded in an amount equal to the Initial Trust Funding Amount. As of
the Effective Date, the Litigation Trust Assets, which include the Causes of
Action, will automatically vest in the Litigation Trust. The Litigation Trust
shall obtain the benefit of any tolling provisions or extensions available to
the Estate or Debtor in Possession prior to the Confirmation Date or Effective
Date, including those set forth in sections 108, 546, 549 and 550 of the
Bankruptcy Code.
Section 6.04. The Litigation Trust Board. The Litigation Trust, if formed,
will be governed by the Litigation Trust Board and the Litigation Trust Assets
will be managed by the Litigation Trustee(s), subject to the provisions of the
Plan, the Confirmation Order and the Litigation Trust Agreement. The Litigation
Trust Board initially will be no less than a three (3) member board composed of
members who will be identified in the Plan Supplement. The Litigation Trust
Agreement shall govern compensation of Litigation Trust Board members and
changes in the composition of the Litigation Trust Board after the Effective
Date and other matters related to the role, responsibilities and governance of
the Litigation Trust Board.
Section 6.05. The Litigation Trustee(s) and Preservation of Causes of
Action. (a) The Litigation Trustee(s) will be the exclusive trustee(s) of the
Litigation Trust Assets for purposes of 31 U.S.C. ss. 3713(b) and 26 U.S.C. ss.
6012(b)(3), as well as the representative of the Estate appointed pursuant to
section 1123(b)(3)(B) of the Bankruptcy Code. The Litigation Trustee(s) shall
have fiduciary duties to beneficiaries of the Litigation Trust in the same
manner that members of an official committee of creditors appointed pursuant to
section 1102 of the Bankruptcy Code have fiduciary duties to the creditor
constituents represented by such a committee. The Litigation Trustee(s) shall be
identified in the Plan Supplement. The Litigation Trustee(s) shall be
compensated from the Litigation Trust Assets, and the Litigation Trust Agreement
shall specify the terms and conditions of such compensation, as well as provide
the manner in which the Litigation Trustee(s) may be removed.
(b) In accordance with section 1123(b)(3) of the Bankruptcy Code,
the Litigation Trustee(s) will retain and may (but are not required to) enforce
all Causes of Action except to the extent, and only to the extent, that any such
Causes of Action are explicitly released pursuant to Section 7.07 of this Plan.
Pursuant to the terms hereof, the Litigation Trustee(s), in their sole and
absolute discretion, will determine whether to bring, settle, release,
compromise or enforce the Causes of Action (or decline to do any of the
foregoing) and will not be required to seek further approval of the Bankruptcy
Court for such action.
Section 6.06. Responsibilities of the Litigation Trustee(s). The
responsibilities of the Litigation Trustee(s) shall be specified in the
Litigation Trust Agreement and shall include: (i) receipt, management,
supervision, and protection of the Litigation Trust Assets on behalf of and for
the benefit of the beneficiaries of the Litigation Trust; (ii) investigation,
analysis, filing,
32
Trenwick America Corporation
Exhibit 99.1
initiation, prosecution, and if necessary and appropriate, compromise of the
Causes of Action; (iii) calculation and implementation of all distributions to
be made to the Trust Beneficiaries; (iv) filing of all required tax returns and
paying of taxes and all other obligations of the Litigation Trust; (v)
employing, retaining, compensating and terminating professionals, consultants,
agents, and employees to assist the Litigation Trustee(s) with respect to the
Litigation Trustee(s)' responsibilities including the filing and prosecution of
Causes of Action; (vi) consulting with and obtaining the required prior approval
of the Litigation Trust Board as set forth in the Litigation Trust Agreement;
(vii) negotiation, receipt, or acceptance of the assignment or transfer of
claims, rights, suits, judgments, causes of action, and/or judgments, recoveries
or proceeds therefrom, from the holders thereof, to the extent that such an
assignment and/or transfer to the Litigation Trust is deemed to be in the best
interests of the beneficiaries to the Litigation Trust; (viii) determination of
the amount of consideration to be provided for the assignment or transfer of
claims, rights, suits, judgments, causes of action, and/or judgments, recoveries
or proceeds therefrom; and (ix) such other responsibilities as may be vested in
the Litigation Trustee(s) pursuant to the Plan, the Litigation Trust Agreement,
orders of the Bankruptcy Court, or as may be necessary and proper to carry out
the provisions of the Plan.
Section 6.07. Powers of the Litigation Trustee(s). The powers of the
Litigation Trustee(s) shall be specified in the Litigation Trust Agreement and
shall include the power to, without Court approval: (i) invest funds; (ii) make
distributions; (iii) pay taxes and other obligations owed by the Litigation
Trust or incurred by the Litigation Trustee(s); (iv) engage and compensate, from
the Litigation Trust Assets, professionals, consultants, agents, and employees
to assist the Litigation Trustee(s) with respect to the Litigation Trustee(s)'
responsibilities, including the filing and prosecution of Causes of Action,
subject to approval by the Litigation Trust Board in accordance with the
procedures and terms of the Litigation Trust Agreement; (v) file, initiate,
analyze, investigate, compromise and settle Causes of Actions; (vi) commence
and/or pursue any and all actions involving Litigation Trust Assets that could
arise or be asserted at any time, unless otherwise waived or relinquished in
this Plan; (vii) negotiate, receive, or accept the assignment or transfer of
claims, rights, suits, judgments, causes of action, and/or judgments, recoveries
or proceeds therefrom, from the holders thereof, to the extent that such an
assignment and/or transfer to the Litigation Trust is deemed to be in the best
interests of the beneficiaries to the Litigation Trust; (viii) determine the
amount of consideration to be provided for the assignment or transfer of claims,
rights, suits, judgments, causes of action, and/or judgments, recoveries or
proceeds therefrom; and (ix) utilize Litigation Trust Assets to purchase
appropriate insurance to insure the acts and omissions of the Litigation
Trustee(s) and the Litigation Trust Board. The Litigation Trustee(s) shall
exercise such powers in accordance with the provisions of this Plan and the
Litigation Trust Agreement, which shall provide that the Litigation Trustee(s)
must consult with the Litigation Trust Board concerning any matter involving an
amount equal to or exceeding $250,000 and obtain the prior approval of the
Litigation Trust Board on other specific matters described in the Litigation
Trust Agreement. The Litigation Trustee(s) are not empowered without further
authorization by New TAC (as may be further limited by the terms of the New
Indentures and the New Loan Agreement) to incur indebtedness payable by New TAC
in excess of the Initial Trust Funding Amount.
Section 6.08. Compensation of the Litigation Trustee(s). In addition to
reimbursement for the actual reasonable and necessary expenses incurred, the
Litigation Trustee(s), and any professionals, employees, agents, or consultants
engaged or retained by the Litigation Trustee(s),
33
Trenwick America Corporation
Exhibit 99.1
shall be entitled to reasonable compensation from the Litigation Trust Assets
for services rendered in connection with performance of the duties of the
Litigation Trustee(s) as set forth above. With respect to any agents,
consultants, employees engaged and professionals retained by the Litigation
Trust and the Litigation Trustee(s), such compensation shall be in an amount and
on such terms as may be agreed to by the Litigation Trustee(s) and such
professionals, agents, consultants, or employees with the written consent of the
Litigation Trust Board and in accordance with the Litigation Trust Agreement.
Compensation of the Litigation Trustee(s) shall be as set forth in the
Litigation Trust Agreement contained in the Plan Supplement.
Section 6.09. Termination. The duties, responsibilities and powers of the
Litigation Trustee(s) shall terminate after all Causes of Action transferred and
assigned to the Litigation Trust or involving the Litigation Trustee(s) on
behalf of the Litigation Trust are fully resolved and the Litigation Trust
Assets have been distributed in accordance with this Plan and the Litigation
Trust Agreement and all matters relative to administration of the Trust have
been concluded, except for the filing of all final tax returns. The Litigation
Trust shall terminate no later than five (5) years from the Effective Date.
However, if warranted by the facts and circumstances provided for in the Plan,
and subject to the approval of the Bankruptcy Court upon a finding that an
extension is necessary for the purpose of the Litigation Trust, the term of
Litigation Trust may be extended for a finite period based on the particular
circumstances at issue; provided, however, that such termination shall occur no
later than the tenth anniversary following the Effective Date. Each such
extension must be approved by the Bankruptcy Court within six (6) months of the
beginning of the extended term with notice thereof to all of the beneficiaries
of the Litigation Trust.
Section 6.10. New Senior Subordinated Notes and Senior Litigation Trust
Certificates. On the Initial Distribution Date, New TAC will issue the New
Senior Subordinated Notes in accordance with the Plan without further act or
action under applicable law, regulation, rule or order. On the Initial
Distribution Date, the Litigation Trust will issue to each holder of a New
Senior Subordinated Note Senior Litigation Trust Certificates in the aggregate
Face Amount equal to the Face Amount of the New Senior Subordinated Notes issued
to such holder. Following the full indefeasible payment of the New Term Loan
Facility and the New Revolver Facility, on each Quarterly Distribution Date each
holder of a New Senior Subordinated Note will receive its Applicable Share of
the Debt Payments made by New TAC in respect of the New Senior Subordinated
Notes on such Quarterly Distribution Date, if any, until the earlier to occur of
the final maturity date of the New Senior Subordinated Notes or such time that
such holder of the New Senior Subordinated Notes has received Debt Payments in
respect of its New Senior Subordinated Notes and Trust Payments in respect of
its Senior Trust Certificates totaling the aggregate Face Amount of the New
Senior Subordinated Notes distributed to it under the Plan. Trust Payments will
be paid by the Litigation Trustee(s) in accordance with the Litigation Trust
Agreement. Each Trust Payment with respect to a Senior Trust Certificate will be
deemed to also be a Debt Payment and will reduce the outstanding principal
amount of the New Senior Subordinated Note to which it corresponds by the amount
of such Trust Payment. The New Senior Subordinated Notes and the corresponding
Senior Trust Certificates cannot be transferred, sold or otherwise disposed of
separately.
Section 6.11. New Junior Subordinated Notes and Junior Litigation Trust
Certificates. On the Initial Distribution Date, New TAC will issue the New
Junior Subordinated Notes in
34
Trenwick America Corporation
Exhibit 99.1
accordance with the Plan without further act or action under applicable law,
regulation, rule or order. On the Initial Distribution Date, the Litigation
Trust will issue the Junior Litigation Trust Certificates in the Face Amount
equal to the Face Amount of the New Junior Subordinated Notes issued to such
holders. Provided that the holders of the New Senior Subordinated Notes have
received Debt Payments (including any Trust Payments deemed to be Debt Payments)
in the aggregate Face Amount of the New Senior Subordinated Notes, on each
Quarterly Distribution Date each holder of a New Junior Subordinated Note will
receive its Applicable Share of the Debt Payments made by New TAC in respect of
the New Junior Subordinated Notes on such Quarterly Distribution Date, if any,
until the earlier of the final maturity date of such New Junior Subordinated
Notes or such time that such holder of the New Junior Subordinated Note has
received Debt Payments in respect of its New Junior Subordinated Notes and Trust
Payments in respect of its Junior Litigation Trust Certificates totaling the
aggregate Face Amount of the New Junior Subordinated Notes distributed to it
under the Plan. Trust Payments will be paid by the Litigation Trustee(s) in
accordance with the Litigation Trust Agreement. Each Trust Payment in respect of
Junior Litigation Trust Certificates will be deemed to also be a Debt Payment
and will reduce the outstanding principal amount of the New Junior Subordinated
Notes attached thereto by the amount of such Trust Payment. The New Junior
Subordinated Notes and the corresponding Junior Litigation Trust Certificates
cannot be transferred, sold or otherwise disposed of separately.
Section 6.12. New TAC Interests and Residual Trust Certificates. On the
Initial Distribution Date, New TAC will issue the New TAC Interests and the
Litigation Trust will issue the Residual Trust Certificates in accordance with
the Plan without further act or action under applicable law, regulation, rule or
order. At such time that all obligations under the New TAC Debt Securities have
been paid in full, holders of the New TAC Interests and the Residual Trust
Certificates will be entitled to receive (i) distributions on account of the New
TAC Interests, to the extent that there is Available Cash and is otherwise
required under this Plan, and (ii) Trust Payments in respect of the Residual
Trust Certificates. The New TAC Interests and the Residual Trust Certificates
cannot be transferred, sold or otherwise disposed of separately.
Section 6.13. Applicability of Securities Laws and Reporting Requirements.
Under section 1145 of the Bankruptcy Code, the issuance of New TAC Securities
and the Trust Certificates under the Plan shall be exempt from registration of
the Securities Act of 1933, as amended, and equivalent provisions in state
securities law. New TAC will take such actions as required to comply with the
registration and reporting requirements of the Securities and Exchange Act of
1934, as amended, and if necessary (upon receiving the advice of counsel) the
Investment Company Act of 1940, as amended, including taking any and all actions
to comply with such reporting requirements and file necessary periodic reports
with the Securities and Exchange Commission. The New TAC Securities will not be
listed on any securities exchange or any quotation system.
Section 6.14. Rights Offering/Exit Facility. Each holder of an Allowed
Trust Preferreds Claim that is an Accredited Investor and is not an Insider of
the Debtor will be offered the opportunity to participate as a lender in the New
Revolver Facility and New Term Loan Facility, which shall serve as an exit
facility, to be made available upon the Effective Date to New TAC and the
Litigation Trust pursuant to the New Loan Agreement. MBIA may elect to be an
assignee or participant in the New Revolver Facility.
35
Trenwick America Corporation
Exhibit 99.1
Section 6.15. Disputed Claims Reserve Account.
(a) Establishment of Disputed Claims Reserve Account. On the Initial
Distribution Date, New TAC and the Litigation Trustee(s), as the case may be,
shall deposit into the Disputed Claims Reserve Account sufficient Cash, New TAC
Securities and Trust Certificates to distribute to each holder of a Disputed
Claim the distribution to which it would be entitled under this Plan if its
Disputed Claim was an Allowed Claim.
(b) Estimation of Claims. From and after the Effective Date, the
Plan Proponents or New TAC may, at any time, request that the Bankruptcy Court
estimate any Claim subject to estimation under section 502(c) of the Bankruptcy
Code and for which New TAC may be liable under the Plan, including any Claim for
taxes, to the extent permitted by section 502(c) of the Bankruptcy Code,
regardless of whether any party in interest previously objected to such Claim,
and the Bankruptcy Court will retain jurisdiction to estimate any Claim pursuant
to section 502(c) of the Bankruptcy Code at any time during litigation
concerning any objection to any Claim, including during the pendency of any
appeal relating to any such objection. In the event that the Bankruptcy Court
estimates any contingent or unliquidated Claim, that estimated amount may
constitute either the Allowed amount of such Claim or a maximum limitation on
such Claim, as determined by the Bankruptcy Court. If the estimated amount
constitutes a maximum limitation on such Claim, the Plan Proponents or New TAC
may elect to pursue any supplemental proceedings to object to any ultimate
allowance on such Claim. All of the aforementioned Claims objection, estimation
and resolution procedures are cumulative and not necessarily exclusive of one
another. Claims may be estimated and subsequently compromised, settled,
withdrawn or resolved by any mechanism approved by the Bankruptcy Court.
(c) Resolution of Disputed Claims. No distribution or payment shall
be made on account of a Disputed Claim until such Disputed Claim becomes an
Allowed Claim. No Distribution or payment shall be made to any holder of an
Allowed Claim who is also a potential defendant in an avoidance action under
chapter 5 of the Bankruptcy Code unless and to the extent that such avoidance
action has been waived, released, enjoined, discharged or otherwise limited by
the Plan or other order of the Bankruptcy Court. For purposes of the Plan, such
distribution or payment on account of such Allowed Claim shall be held in the
Disputed Claims Reserve Account as if it were a Disputed Claim, unless otherwise
ordered by the Bankruptcy Court. After the Effective Date, New TAC shall have
the exclusive right to make and file objections to and settle, compromise or
otherwise resolve Disputed Claims. New TAC shall file and serve a copy of each
objection upon the holder of the Claim to which an objection is made as soon as
practicable, but in no event later than (i) one hundred-twenty (120) days after
the Effective Date, or (ii) such other time as may be fixed or extended by the
order of the Bankruptcy Court. After the Effective Date, New TAC may settle or
compromise any Disputed Claim without approval of the Bankruptcy Court.
(d) Distributions when a Disputed Claim Becomes an Allowed Claim,
Upon Occurrence of a LoC Claim Date, or when a Disputed Claim is Subsequently
Disallowed. On the first Quarterly Distribution Date after a Disputed Claim
becomes an Allowed Claim, New TAC shall make Pro Rata distributions, in
accordance with the provisions of this Plan (calculated as of such Quarterly
Distribution Date), of Cash, New TAC Securities, Trust Certificates, Debt
Payments or Trust Payments, as the case may be, in respect of such Disputed
Claim that has
36
Trenwick America Corporation
Exhibit 99.1
become an Allowed Claim or for a LoC Outstanding for which a LoC Claim Date has
occurred during the preceding calendar quarter. Any distributions held in the
Disputed Claims Reserve Account for the benefit of a holder of a Disputed Claim
which is subsequently Disallowed, in whole or part, shall be included in Free
Cash Flow and distributed, on the next Quarterly Distribution Date, in
accordance with the distribution of Free Cash Flow on such Quarterly
Distribution Date.
(e) Late Claims. Except as otherwise expressly provided in this
Plan, any Claim not deemed Filed pursuant to section 1111(a) of the Bankruptcy
Code or timely Filed pursuant to the Bankruptcy Code, Bankruptcy Rules or any
applicable order of the Bankruptcy Court, shall not be treated as an Allowed
Claim.
Section 6.16. Miscellaneous Distribution Provisions.
(a) Method of Cash Distributions. Cash payments made pursuant to the
Plan shall be in U.S. dollars by checks drawn on, or by wire transfer from, a
domestic bank selected by New TAC; provided, however, that cash payments made to
foreign creditors, if any, holding Allowed Claims may be paid, solely at the
option of New TAC in such funds and by such means as are reasonably necessary or
customary in a particular foreign jurisdiction.
(b) Distributions on Non-Business Days. Any payment or distribution
due on a day other than a Business Day shall be made, without interest, on the
next Business Day.
(c) Accrual of Post-petition and Post-confirmation Interest. Unless
otherwise provided for in the Plan or by an order of the Bankruptcy Court, no
holder of a Prepetition Claim shall be entitled to the accrual of interest,
during the pendency of the Chapter 11 Case or post-confirmation, on account of
such Claim.
(d) No Distribution Pending Allowance. Notwithstanding any other
provision of this Plan, no Cash or other property shall be distributed under
this Plan on account of any Disputed Claim, unless and until such Claim becomes
an Allowed Claim. No distribution or payment shall be made to any holder of an
Allowed General Unsecured Claim who is also a potential defendant in an
avoidance action under chapter 5 of the Bankruptcy Code. Notwithstanding this
section, a distribution to such potential defendant shall not constitute a
waiver of any rights of the Debtor, New TAC or the Litigation Trustee(s), as the
case may be. For purposes of the Plan, such distribution or payment on account
of such Allowed General Unsecured Claim shall be held in the Disputed Claims
Reserve Account as if it were a Disputed Claim.
(e) No Distribution of Fractional New TAC Securities and Trust
Certificates. Notwithstanding any other provisions of the Plan, only whole
shares of New TAC Securities and Trust Certificates shall be issued. When any
distribution on account of an Allowed Claim would otherwise result in the
issuance of a number of New TAC Securities and Trust Certificates that is not a
whole number, any fractional New TAC Securities and Trust Certificates that
otherwise would have been distributed shall be rounded to the nearest whole
number. Notwithstanding the foregoing, if a Person holds more than one Claim,
the fractional New TAC Securities and Trust Certificates that such Person
otherwise would be entitled to on account of each such Claim held
37
Trenwick America Corporation
Exhibit 99.1
by such Person shall be aggregated and, after taking into account such
aggregation, such Person shall receive on account thereof (in addition to any
whole number of New TAC Securities, and Trust Certificates or other Distribution
such Person is entitled to under this Plan prior to such aggregation) any
resulting whole number of shares of New TAC Securities and Trust Certificates
with any remaining fractional New TAC Securities and Trust Certificates.
(f) No Distribution in Excess of Allowed Amount of Claim.
Notwithstanding anything to the contrary herein, no holder of an Allowed Claim
shall receive, in respect of such Claim, any distribution (of a value set forth
herein or in the Disclosure Statement) in excess of the Allowed amount of such
Claim.
Section 6.17. De Minimis Distributions. Notwithstanding anything to the
contrary in the Plan, if the amount of Cash to be distributed to the holder of
an Allowed Claim in Classes 3, 4, 7, 9 or 10, as a Debt Payment, Trust Payment
or a distribution on account of a New TAC Security or Trust Certificate, as the
case may be, is less than $50.00, New TAC or the Litigation Trustee(s) as the
case may be, may hold the Cash distributions to be made to such holder until the
aggregate amount of Cash to be distributed to such holder is in an amount equal
to or greater than $50.00 if New TAC or the Litigation Trustee(s) determine that
the cost to distribute such Cash is unreasonable in light of the amount of Cash
to be distributed. Notwithstanding the preceding sentence, if the amount of Cash
distribution to such holder never aggregates to more than $50.00, then on the
final Distribution Date, New TAC and the Litigation Trustee(s) may distribute
such Cash to the holder entitled thereto.
Section 6.18. Setoffs. Except as otherwise provided or limited in the
Plan, the Debtor in consultation with the Plan Proponents or New TAC, as the
case may be, is authorized, pursuant to section 553 of the Bankruptcy Code, to
set off against any Allowed Claim and the distributions to be made on account of
such Allowed Claim, the claims, rights and causes of action of any nature that
the Debtor may hold against the holder of such Allowed Claim; provided, however,
that neither the failure to effect such a setoff nor the allowance of any Claim
hereunder shall by itself constitute a waiver or release by the Debtor of any
such claims, rights and causes of action that the Debtor may possess against
such holder. The amount of Trust Certificates and Trust Payments to be
distributed to the holder of an Allowed Claim shall be reduced by the same
amount that the New TAC Debt Security is reduced pursuant to the right of setoff
hereunder.
Section 6.19. Unclaimed Property.
(a) Escrow of Unclaimed Property. Unclaimed Property (and all Debt
Payments, Trust Payments, distributions and other amounts paid thereon) shall be
delivered promptly to New TAC. New TAC shall deposit such Unclaimed Property in
an account (for the benefit of the holders of Allowed Claims entitled thereto
under the terms of this Plan). For a period of one year following the Effective
Date, Unclaimed Property, including any interest, Debt Payments, Trust Payments,
distributions on New TAC Interests, and other amounts paid thereon, shall be:
(i) held in such account solely for the benefit of the holders of Allowed Claims
that have failed to claim such property; and (ii) released from such account and
delivered to the holder of an Allowed Claim upon presentation of proper proof by
such holder of its entitlement thereto. New TAC shall pay, or cause to be paid,
out of the funds held in such account, any tax
38
Trenwick America Corporation
Exhibit 99.1
imposed by any federal, state or local taxing authority on the income generated
by the funds held in such account. New TAC shall also file, or cause to be filed
any tax or information return related to such accounts. All Cash held in such
accounts shall be invested in accordance with section 345 of the Bankruptcy
Code, as modified by the relevant orders of the Bankruptcy Court for investments
made by the Debtor during the Chapter 11 Case. The earnings on such investments
shall be held in trust as an addition to the balance of the subaccount for the
benefit of the holders of Allowed Claims entitled to such Unclaimed Property,
and shall not constitute property of New TAC.
(b) Distribution of Unclaimed Property. At the end of one year
following the relevant Distribution Date, the holders of Allowed Claims
theretofore entitled to Unclaimed Property shall cease to be entitled thereto
(collectively, such holders are referred to herein as the "Unclaimed Holders"),
and the Unclaimed Property for each Unclaimed Holder shall then be distributed
to New TAC and thereafter distributed in accordance with the Plan; provided
however, that any Trust Certificates constituting Unclaimed Property shall be
distributed to the Litigation Trustee(s) and thereafter distributed in
accordance with the Plan. Unclaimed Property in the form of Cash shall be
distributed by New TAC on the next Quarterly Distribution Date to those parties
entitled to the Free Cash Flow on such Quarterly Distribution Date. Securities
that are Unclaimed Property shall be cancelled.
Section 6.20. Exemption from Transfer Taxes. To the fullest extent
allowable by section 1146(c) of the Bankruptcy Code, the issuance, transfer, or
exchange of a security, or the making or delivery of an instrument of transfer
under this Plan may not be taxed under any law imposing a stamp tax or similar
tax.
Section 6.21. Cancellation of Old Common Stock. As of the Effective Date,
by virtue of the Plan and in all events without any action on the part of the
holders thereof, TAC or New TAC, each share of Old Common Stock issued and
outstanding or held in treasury shall be cancelled and retired and no
consideration will be paid or delivered with respect thereto. Notwithstanding
anything herein to the contrary, holders of Old Common Stock shall not be
required to surrender such stock to the Debtor.
Section 6.22. Cancellation of Senior Notes and Agreements, Old Securities
and Other Instruments. As of the Effective Date, and in consideration of the
Trust Certificates, Trust Interests and New TAC Securities received under this
Plan, except as otherwise provided for in the Plan, each Old Security and any
other note, bond, Indenture (other than the Trust Preferreds Indentures), or
other instrument or document evidencing or creating any indebtedness or
obligation of the Debtor, including any guaranty claims of the LoC Bank Group
against the Debtor, will be deemed cancelled and of no further force or effect
without any further action on the part of the Bankruptcy Court, or any Person
including, but not limited to, governmental agencies. Notwithstanding the fact
that the Trust Preferreds Indentures are not cancelled hereunder, for avoidance
of doubt, the indebtedness under the Trust Preferreds Indentures, the Trust
Preferreds, will be deemed cancelled because such indebtedness is treated under
the Plan. The holders of such cancelled Old Securities and the LoC Bank Group
will have no claims against the Debtor for payment of such except for the rights
provided pursuant to the Plan.
39
Trenwick America Corporation
Exhibit 99.1
On the Effective Date, the Old Securities will be surrendered to their
respective Indenture Trustee in accordance with the terms of the relevant
Indenture. The Initial Distribution under this Plan in respect of Allowed Claims
under the Old Securities shall be made to the appropriate Indenture Trustee for
the benefit of such holders. Following the Initial Distribution under this Plan,
the Indenture Trustees shall be discharged of all further duties under each
Indenture Trustee's relevant Indenture. All distributions subsequent to the
Initial Distribution shall be made (in each case in accordance with the Plan)
pursuant to the Litigation Trust Agreement and (i) the New Indentures with
respect to the New TAC Debt Securities or (ii) the New TAC Certificate of
Formation and Limited Liability Company Agreement with respect to the New TAC
Interests.
Any Old Security which is lost, stolen, mutilated or destroyed, shall be
deemed surrendered when the holder of a Claim based thereon delivers to the
applicable Indenture Trustee, agent, servicer or New TAC (a) evidence
satisfactory to the Indenture Trustee, agent, servicer or New TAC of the loss,
theft, mutilation or destruction of such instrument or certificate, and (b) such
security or indemnity as may be required by the Indenture Trustee, agent,
servicer or New TAC to hold each of them harmless with respect thereto.
With the exception of the Trust Preferreds Indentures which shall remain
in full effect, each Indenture or other agreement that governs the rights of the
holder of a Claim and that is administered by an Indenture Trustee, an agent or
a servicer, shall continue in effect solely for the purposes of allowing such
Indenture Trustee, agent or servicer to make the distributions to be made on
account of such Claims under this Plan. Notwithstanding the terms of the
foregoing sentence and any other term of this Plan providing for the continued
efficacy of the Trust Preferreds Indentures, HSBC shall be permanently released
and discharged from all duties, obligations and responsibilities under the Trust
Preferreds Indentures immediately following the Initial Distribution.
The Indenture Trustees shall retain all charging liens on distributions
under the Plan until receipt of payment in Cash of the Indenture Trustee's fees
and expenses, including the fees and disbursements of counsel as determined
pursuant to Section 4.04 of the Plan.
Section 6.23. Instructions to New TAC. Prior to any distribution on
account of any Old Securities, an Indenture Trustee shall (a) inform New TAC as
to the amount of properly surrendered Old Securities, and (b) instruct New TAC
in a form and manner that New TAC reasonably determines to be acceptable, of the
names of the holders of Old Securities who are to receive Distributions in
exchange for properly surrendered Old Securities; alternatively, to the extent
such Old Securities are held in electronic format, a report from the applicable
clearinghouse.
Section 6.24. Disputed Payments. If any dispute arises as to the identity
of a holder of an Allowed Claim who is to receive any distribution, New TAC may,
in lieu of making such distribution to such Person, make such distribution into
an account to be held in trust for the benefit of such holder and shall not
constitute property of the Debtor, its Estate, New TAC or the Litigation Trust.
Such distribution shall be held in escrow until the disposition thereof shall be
determined by order of the Bankruptcy Court or other court of competent
jurisdiction or by written agreement among the interested parties to such
dispute.
40
Trenwick America Corporation
Exhibit 99.1
Section 6.25. Withholding Taxes. In connection with the Plan, to the
extent applicable, New TAC shall comply with all withholding and reporting
requirements imposed on it by federal, state and local taxing authorities, and
all distributions shall be subject to such withholding and reporting
requirements.
Section 6.26. Obligations Incurred After the Effective Date. Payment
obligations incurred after the Effective Date, including, without limitation,
the fees and expenses of Professionals, shall not be subject to application or
Proof of Claim and may be paid by New TAC in the ordinary course of business and
without further Bankruptcy Court approval.
Section 6.27. Distribution Record Date for Distributions to Holders of Old
Securities. On the Distribution Record Date, the transfer ledgers of the
Indenture Trustees shall be closed, and there shall be no further changes in the
record holders of the Old Securities. The Debtor, New TAC and the Indenture
Trustees, agents and servicers for such Old Securities shall have no obligation
to recognize any transfer of such Old Securities occurring after such
Distribution Record Date. The Debtor, New TAC and the Indenture Trustees, agents
and servicers for such Old Securities shall be entitled instead to recognize and
deal for all purposes hereunder with only those record holders stated on the
transfer ledgers as of the close of business on such Distribution Record Date.
Section 6.28. Restructuring Transactions Generally. On or before the
Effective Date, the Debtor may, but is not obligated to, enter into such
Restructuring Transactions and may, but is not obligated to, take such actions
as may be necessary or appropriate to effect a corporate restructuring of its
business or simplify its overall corporate structure. The Restructuring
Transactions that are potentially contemplated to occur on or before the
Effective Date will be described more fully in the Plan Supplement; provided,
however, that the Plan Proponents reserve the right to direct the Debtor to
undertake transactions in lieu of, or in addition to, such Restructuring
Transactions as may be necessary or appropriate under the circumstances. Such
transactions may include one or more mergers, sales, consolidations,
restructurings, acquisitions, dispositions, liquidations or dissolutions, as may
be determined by the Plan Proponents in consultation with the Committee to be
necessary or appropriate. The actions to effect these Restructuring Transactions
may include: (a) the execution and delivery of appropriate agreements or other
documents of merger, sale consolidation, restructuring, disposition, liquidation
or dissolution containing terms that are consistent with the terms of the Plan
and that satisfy the applicable requirements of applicable state law and such
other terms to which the applicable entities may agree; (b) the execution and
delivery of appropriate instruments of transfer, assignment, assumption or
delegation of any asset, property, right, liability, duty or obligation on terms
consistent with the terms of the Plan and having such other terms to which the
applicable entities may agree; (c) the filing of appropriate certificates or
articles of merger, consolidation, incorporation or dissolution pursuant to
applicable state law; and (d) all other actions that the applicable entities
determine to be necessary or appropriate, including making filings or recordings
that may be required by applicable state law in connection with such
Restructuring Transactions. Notwithstanding anything to the contrary herein,
Restructuring Transactions shall be limited to such transactions reasonably
necessary and appropriate to effect the provisions of the Plan and to maximize
the benefit to be realized from TAC's consolidated tax group's net operating
losses.
41
Trenwick America Corporation
Exhibit 99.1
Section 6.29. Obligations of Any Successor Entity in a Restructuring
Transaction. The Restructuring Transactions may include one or more mergers,
sales, consolidations, restructurings, dispositions, liquidations or
dissolutions, as may be determined by the Plan Proponents in consultation with
the Creditors' Committee (and subject to Section 6.28 hereof) to be necessary or
appropriate to result in substantially all of the respective assets, properties,
rights, liabilities, duties and obligations of the Debtor vesting in one or more
surviving, resulting or acquiring limited liability companies or corporations.
In each case in which the surviving, resulting or acquiring limited liability
company in any such transaction is a successor to the Debtor, such surviving,
resulting or acquiring limited liability company will perform the obligations of
the Debtor and/or New TAC pursuant to the Plan to pay or otherwise satisfy the
Allowed Claims against such Debtor.
Section 6.30. New Operational Subsidiary. On or before the Effective Date,
TARCO shall create a new subsidiary, TASCO, that will employ all of the current
employees of TAC who are currently providing services to InsCorp and TARCO,
among others, and maintain responsibility for the operations of InsCorp and
TARCO and others to the extent agreed upon by New TAC. TAC will also enter into
an administrative services agreement with TASCO, whereby TASCO will provide TAC
with services related to the administration of TAC's Chapter 11 estate.
Section 6.31. Regulatory Filings. The Debtor and New TAC shall continue to
be responsible for preparing, and shall cause their respective subsidiaries and
affiliates, if necessary and as appropriate, to prepare the appropriate
regulatory filings in the ordinary course with their respective governing
regulatory bodies with respect to insurance matters.
Section 6.32. Form A Filings. Prior to any change of control, Form A
Filings shall be filed with and approved by the appropriate governing regulatory
bodies.
Section 6.33. Post-Confirmation Action.
(a) Post-Confirmation, Pre-Effective Date. Subsequent to the
Confirmation Date, but prior to the Effective Date, the Debtor shall continue to
operate its business in the ordinary course in accordance with the Bankruptcy
Code and any applicable Bankruptcy Court orders affecting the same, including
any order, which may be the Confirmation Order, entered by the Bankruptcy Court
at the request of the Plan Proponents establishing operating guidelines for the
Debtor, which guidelines shall be included in the Plan Supplement and are
subject to regulatory approval.
(b) Post-Effective Date. In accordance with section 1142(b) of the
Bankruptcy Code and section 303 of the Delaware General Corporation Laws, on the
Effective Date, all matters provided for under the Plan that would otherwise
require approval of the stockholders, directors, or members of one or more of
the Debtor, New TAC, the Plan Proponents, or any other Person under the Plan,
including, without limitation, the authorization to issue or cause to be issued
the New TAC Securities, the effectiveness of New TAC Certificate of Formation
and the New TAC Limited Liability Company Agreement, corporate mergers or
dissolutions effectuated pursuant to the Plan, and the election or appointment,
as the case may be, of directors and officers of New TAC pursuant to the Plan,
shall be deemed to have occurred
42
Trenwick America Corporation
Exhibit 99.1
and shall be in effect from and after the Effective Date pursuant to the
applicable general corporation or similar laws of the State of Delaware, without
further order of the Bankruptcy Court and without any requirement of further
action by the stockholders, directors or members of TAC or New TAC. On the
Effective Date or as soon thereafter as is practicable, New TAC shall, if
required, file its New TAC Certificate of Formation with the Secretary of State
of the State of Delaware, in accordance with the applicable law of such state.
Section 6.34. Election of Treatment in Class 8. Each holder of a Claim in
Class 7 may elect, in the Ballot by which it votes to accept or reject the Plan,
to reduce the amount of its Claim to $500.00 or less and thereby be deemed a
holder of a Claim in Class 8 for purposes of voting and payment under the Plan.
Any such election shall be effective only upon the receipt thereof by the Plan
Proponents prior to the Confirmation Date. Once the election is made, and
received by the Plan Proponents, such election shall be irrevocable but shall
not preclude the Plan Proponents or any other party from objecting to such Claim
as reduced.
Section 6.35. Allocation of Plan Distributions Between Principal and
Interest. To the extent that any Allowed Claim entitled to a distribution under
the Plan is comprised of indebtedness and accrued but unpaid interest thereon,
such distribution shall be allocated first to the principal amount of the Claim
(as determined for federal income tax purposes) and then, to the extent the
consideration exceeds the principal amount of the Claim, to accrued but unpaid
interest.
Section 6.36. Establishment of New TAC Bank Group Escrow. On the Effective
Date, New TAC and the LoC Bank Group shall enter into the New TAC Bank Group
Escrow Agreement, in, or substantially in, the form of that contained in the
Plan Supplement, pursuant to which the New TAC Bank Escrow will be established
to hold in trust the distributions to holders of Allowed Class 3 Claims under
the Plan until the Final LoC Claim Date and otherwise implement the terms of the
Letter of Intent.
ARTICLE VII.
EFFECT OF THE PLAN ON CLAIMS AND INTERESTS
Section 7.01. Plan Embodies Settlement. As described in the Disclosure
Statement and embodied in the Letter of Intent, this Plan constitutes a good
faith compromise and settlement of certain claims and interests between and
among the LoC Bank Group, the Plan Proponents, the Creditors' Committee and
other parties in interest in accordance with section 1123(b) of the Bankruptcy
Code.
Section 7.02. Jurisdiction of Bankruptcy Court. Until the Effective Date,
the Bankruptcy Court shall retain jurisdiction over the Debtor and its Estate.
Thereafter, jurisdiction of the Bankruptcy Court shall be limited to the subject
matters set forth in Article XI of this Plan.
Section 7.03. Binding Effect. Except as otherwise provided in section
1141(d) of the Bankruptcy Code, on and after the Confirmation Date, the
provisions of this Plan shall bind any holder of a Claim against, or Interest
in, the Debtor and their respective successors and assigns,
43
Trenwick America Corporation
Exhibit 99.1
whether or not the Claim or Interest of such holder is impaired under this Plan
and whether or not such holder has accepted this Plan.
Section 7.04. Term of Injunctions or Stays. Unless otherwise provided
herein, all injunctions or stays provided for in the Chapter 11 Case pursuant to
sections 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on
the Confirmation Date, shall remain in full force and effect until the later of:
(1) the Final Claims Resolution Date or (2) the Effective Date.
Section 7.05. Discharge.
(a) Scope. Except as otherwise provided in the Plan or Confirmation
Order, and subject to section 1141(d)(1) of the Bankruptcy Code, when the
Confirmation Order becomes a Final Order, the Plan and the Confirmation Order
shall discharge, effective as of the Effective Date, all debts of, Claims
against, Liens on, and Interests in the Debtor, its assets, or properties, which
debts, Claims, Liens, and Interests arose at any time before the entry of the
Confirmation Order. The discharge of the Debtor shall be effective as to each
Claim or Interest, regardless of whether a Proof of Claim or Interest therefore
was filed, whether the Claim is an Allowed Claim, or whether the holder thereof
votes to accept the Plan. On the Effective Date, as to every discharged Claim
and Interest, any holder of such Claim or Interest shall be precluded from
asserting against the Debtor or New TAC formerly obligated with respect to such
Claim or Interest, or against the Debtor's or New TAC's assets or properties,
any other or further Claim or Interest based upon any document, instrument, act,
omission, transaction, or other activity of any kind or nature that occurred
before the Confirmation Date.
(b) INJUNCTION. EXCEPT AS OTHERWISE PROVIDED IN THE PLAN OR
CONFIRMATION ORDER, AS OF THE EFFECTIVE DATE, ALL ENTITIES THAT HOLD A CLAIM
THAT IS DISCHARGED PURSUANT TO SECTION 7.05(A) OR AN INTEREST OR OTHER RIGHT OF
AN EQUITY SECURITY HOLDER THAT IS TERMINATED PURSUANT TO THE TERMS OF THE PLAN,
ARE PERMANENTLY ENJOINED FROM TAKING ANY OF THE FOLLOWING ACTIONS ON ACCOUNT OF
ANY SUCH DISCHARGED CLAIMS OR TERMINATED INTERESTS OR RIGHTS: (1) COMMENCING OR
CONTINUING IN ANY MANNER ANY ACTION OR OTHER PROCEEDING AGAINST THE DEBTOR, NEW
TAC, THE DISPUTED CLAIMS RESERVE ACCOUNT, THE NEW TAC BANK GROUP ESCROW, THE
LITIGATION TRUST OR ANY RELEASED PARTY; (2) ENFORCING, ATTACHING, COLLECTING OR
RECOVERING IN ANY MANNER ANY JUDGMENT, AWARD, DECREE OR ORDER AGAINST THE
DEBTOR, NEW TAC, THE DISPUTED CLAIMS RESERVE ACCOUNT, THE NEW TAC BANK GROUP
ESCROW OR ANY RELEASED PARTY OR ANY OF THEIR RESPECTIVE ASSETS; (3) CREATING,
PERFECTING OR ENFORCING ANY LIEN OR ENCUMBRANCE AGAINST THE DEBTOR, NEW TAC, THE
DISPUTED CLAIMS RESERVE ACCOUNT, THE NEW TAC BANK GROUP ESCROW, THE LITIGATION
TRUST OR ANY RELEASED PARTY; (4) ASSERTING A RIGHT OF OFFSET OR SUBROGATION OF
ANY KIND AGAINST ANY OBLIGATION DUE TO THE DEBTOR, NEW TAC, THE DISPUTED CLAIMS
ACCOUNT, THE NEW TAC BANK GROUP ESCROW, THE LITIGATION TRUST OR ANY RELEASED
PARTY; AND (5) COMMENCING OR CONTINUING ANY ACTION THAT DOES NOT COMPLY WITH OR
IS INCONSISTENT WITH THE PLAN; PROVIDED, HOWEVER, NOTHING HEREIN
44
Trenwick America Corporation
Exhibit 99.1
SHALL AFFECT THE RIGHTS OF THE LOC BANK GROUP TO COMMENCE ANY ACTION OR
PROCEEDING (WHETHER DIRECTLY, INDIRECTLY, DERIVATIVELY OR OTHERWISE) ON ACCOUNT
OF, OR IN RESPECT OF ANY, CLAIM, DEBT, RIGHT OR CAUSE OF ACTION THAT THE LOC
BANK GROUP MAY HAVE IN CONNECTION WITH THE CREDIT DOCUMENTS OR OTHERWISE AGAINST
ANY PARTY OTHER THAN THE DEBTOR OR NEW TAC.
(c) Release of Collateral. Unless a particular Secured Claim is
Reinstated or the holder thereof receives a return of its Collateral in respect
of such Claim under this Plan: (i) each holder of (A) a Secured Claim against
the Debtor; and/or (B) a Claim that is purportedly secured against the Debtor,
shall on or immediately before the Effective Date: (x) turn over and release to
New TAC any and all property that secures or purportedly secures such Claim; and
(y) execute such documents and instruments as the Debtor or New TAC requires to
evidence such claimant's release of such property; and (ii) on the Effective
Date, all claims, right, title and interest in such property shall revert to New
TAC, free and clear of all Claims and Interests, including (without limitation)
Liens, charges, pledges, encumbrances and/or security interests of any kind. No
distribution hereunder shall be made to or on behalf of any holder of such Claim
unless and until such holder executes and delivers to the Debtor or New TAC such
release of Liens. Any such holder that fails to execute and deliver such release
of Liens within 180 days of the Effective Date shall be deemed to have no
further Claim and shall not participate in any distribution hereunder.
Notwithstanding the immediately preceding sentence, any holder of a Disputed
Claim shall not be required to execute and deliver such release of Liens until
the time such Claim is Allowed or Disallowed. Nothing herein shall affect the
status of the collateral provided, or to be provided, to the LoC Bank Group
under the Credit Documents by any other party other than collateral provided
with respect to the Debtor or Trenwick (Barbados).
Section 7.06. CAUSE OF ACTION INJUNCTION. ON AND AFTER THE EFFECTIVE DATE,
FOR CAUSE SHOWN, (A) ALL PERSONS OTHER THAN NEW TAC, THE LITIGATION TRUSTEE(S)
OR THE LITIGATION TRUST WILL BE PERMANENTLY ENJOINED FROM COMMENCING OR
CONTINUING IN ANY MANNER ANY ACTION OR PROCEEDING (WHETHER DIRECTLY, INDIRECTLY,
DERIVATIVELY OR OTHERWISE) ON ACCOUNT OF, OR RESPECTING ANY, CLAIM, DEBT, RIGHT
OR CAUSE OF ACTION THAT NEW TAC, THE LITIGATION TRUSTEE(S) OR THE LITIGATION
TRUST, AS THE CASE MAY BE, RETAIN(S) SOLE AND EXCLUSIVE AUTHORITY TO PURSUE AND
(B) ALL PERSONS OTHER THAN NEW TAC, THE LITIGATION TRUSTEE(S) OR THE LITIGATION
TRUST WILL BE PERMANENTLY ENJOINED FROM COMMENCING OR CONTINUING IN ANY MANNER
ANY ACTION OR PROCEEDING (WHETHER DIRECTLY, INDIRECTLY, DERIVATIVELY OR
OTHERWISE) ON ACCOUNT OF OR RESPECTING ANY SUCH CAUSES OF ACTION.
Section 7.07. RELEASE OF CERTAIN SPECIFIED CLAIMS RELATING TO PARTIES
INTEGRAL TO REORGANIZATION.
(a) ON THE EFFECTIVE DATE, THE ESTATE, THE DEBTOR AND NEW TAC, ON
BEHALF OF THEMSELVES, THE ESTATE AND EACH CREDITOR VOTING TO ACCEPT THE PLAN,
SHALL BE DEEMED TO RELEASE THE LOC BANK RELEASED PARTIES FROM ALL SPECIFIED LOC
BANK RELEASED CLAIMS, AND
45
Trenwick America Corporation
Exhibit 99.1
SHALL BE DEEMED TO ALSO RELEASE THE JP MORGAN RELEASED PARTIES FROM ALL
SPECIFIED ADDITIONAL JPMORGAN RELEASED CLAIMS.
(b) ON THE EFFECTIVE DATE, THE ESTATE, THE DEBTOR AND NEW TAC, ON
BEHALF OF THEMSELVES, THE ESTATE AND EACH CREDITOR VOTING TO ACCEPT THE PLAN,
SHALL BE DEEMED TO RELEASE THE COMMITTEE RELEASED PARTIES FROM ALL SPECIFIED
COMMITTEE RELEASED CLAIMS.
(c) ON THE EFFECTIVE DATE, THE ESTATE, THE DEBTOR AND NEW TAC, ON
BEHALF OF THEMSELVES, THE ESTATE AND EACH CREDITOR VOTING TO ACCEPT THE PLAN,
SHALL BE DEEMED TO RELEASE THE SENIOR NOTEHOLDERS RELEASED PARTIES FROM ALL
SPECIFIED SENIOR NOTEHOLDERS RELEASED CLAIMS.
(d) ON THE EFFECTIVE DATE, THE ESTATE, THE DEBTOR AND NEW TAC, ON
BEHALF OF THEMSELVES, THE ESTATE AND EACH CREDITOR VOTING TO ACCEPT THE PLAN,
SHALL BE DEEMED TO RELEASE THE TRUST PREFERREDS RELEASED PARTIES FROM ALL
SPECIFIED TRUST PREFERREDS RELEASED CLAIMS.
(e) ON THE EFFECTIVE DATE, THE ESTATE, THE DEBTOR AND NEW TAC, ON
BEHALF OF THEMSELVES, THE ESTATE AND EACH CREDITOR VOTING TO ACCEPT THE PLAN,
SHALL BE DEEMED TO RELEASE THE MAGICSUNNY RELEASED PARTIES FROM THE SPECIFIED
MAGICSUNNY RELEASED CLAIMS.
(f) ON THE EFFECTIVE DATE, THE ESTATE, THE DEBTOR AND NEW TAC, ON
BEHALF OF THEMSELVES, THE ESTATE AND EACH CREDITOR VOTING TO ACCEPT THE PLAN,
SHALL BE DEEMED TO RELEASE THE HSBC RELEASED PARTIES FROM ALL SPECIFIED HSBC
RELEASED CLAIMS.
(g) ON THE EFFECTIVE DATE, THE ESTATE, THE DEBTOR AND NEW TAC, ON
BEHALF OF THEMSELVES, THE ESTATE AND EACH CREDITOR VOTING TO ACCEPT THE PLAN,
SHALL BE DEEMED TO RELEASE THE WILMINGTON RELEASED PARTIES FROM ALL SPECIFIED
WILMINGTON RELEASED CLAIMS.
PROVIDED THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, (I) IN NO EVENT
SHALL ANY OF THE RELEASES PROVIDED HEREIN EXTEND TO ANY OF THE PERSONS EXCLUDED
FROM RELEASES, (II) ANY RELEASES PROVIDED HEREIN SHALL NOT EXTEND TO ANY
CAPACITY OTHER THAN THAT DESCRIBED HEREIN, (III) ANY RELEASES PROVIDED HEREIN
SHALL NOT EXTEND TO MATTERS OR CLAIMS OTHER THAN THOSE DESCRIBED HEREIN, (IV)
ANY AND ALL RELEASES PROVIDED HEREIN SHALL BE SUBJECT TO THE LIMITATIONS SET
FORTH HEREIN, AND (V) ANY AND ALL RELEASES PROVIDED HEREIN SHALL NOT EXTEND TO
FUTURE ACTS, OMISSIONS OR EVENTS THAT POST-DATE THE EFFECTIVE DATE; PROVIDED
FURTHER THAT THE DEBTOR, NEW TAC, THE
46
Trenwick America Corporation
Exhibit 99.1
LITIGATION TRUST, AND THE LITIGATION TRUSTEE(S) SHALL NOT RELINQUISH OR WAIVE
THE RIGHT TO ASSERT ANY OF THE CLAIMS OR RIGHTS RELEASED AS A LEGAL OR EQUITABLE
DEFENSE OR RIGHT, OFFSET OR RECOUPMENT AGAINST CLAIMS OF THE LOC BANK GROUP IN
EXCESS OF THE SETTLEMENT AMOUNT PROVIDED FOR HEREIN, AND/OR AGAINST CLAIMS OF
ONE OR MORE OF THE RELEASED PARTIES ASSERTED AGAINST THE DEBTOR, NEW TAC, THE
LITIGATION TRUST, OR LITIGATION TRUSTEE(S); PROVIDED FURTHER THAT THE DEBTOR,
NEW TAC, THE LITIGATION TRUST, AND THE LITIGATION TRUSTEE(S) SHALL NOT
RELINQUISH OR WAIVE THEIR RIGHTS OF SUBROGATION.
Section 7.08. Subrogation of New TAC to Certain Rights of The LoC Bank
Group. At such time, and to the extent that, the LoC Bank Group has received
payment in full on account of the LoC Bank Group's Maximum TAC Claim, payment in
full of the New Junior Subordinated Notes, and after all obligations under the
Credit Documents shall have been satisfied in full, New TAC, shall be subrogated
to the LoC Bank Group and shall be entitled to receive all amounts owed by any
Person to the LoC Bank Group on account of the LoCs Outstanding other than
amounts due to the LoC Bank Group in connection with the LoC Bank Group UK
Equity Interest which amounts are due to the LoC Bank Group and not to any other
Person, regardless of whether the LoC Bank Group has received payment in full on
account of the LoC Bank Group's Maximum TAC Claim or payment in full of the New
TAC Subordinated Notes. The LoC Bank Group shall cooperate to the extent
reasonably necessary to ensure that all payments on account of the LoCs
Outstanding and the Credit Documents are directed to payment in full of the New
TAC Debt Securities, and after all obligations thereunder have been satisfied in
full, to New TAC.
Section 7.09. Exculpation, Release and Injunction of Released Parties.
(a) EXCULPATION. THE PLAN PROPONENTS, THE DEBTOR, NEW TAC AND THE
RELEASED PARTIES SHALL HAVE NO LIABILITY WHATSOEVER TO ANY HOLDER OR PURPORTED
HOLDER OF AN ADMINISTRATIVE CLAIM, CLAIM, OR INTEREST FOR ANY ACT OR OMISSION IN
CONNECTION WITH, OR ARISING OUT OF, THE FORMULATION, NEGOTIATION, PREPARATION,
DISSEMINATION, IMPLEMENTATION, CONFIRMATION OR CONSUMMATION OF THE CHAPTER 11
CASE, THE PLAN, THE DISCLOSURE STATEMENT, AND THE OTHER AGREEMENTS OR DOCUMENTS
CREATED OR ENTERED INTO, OR ANY OTHER ACTION TAKEN OR OMITTED TO BE TAKEN IN
CONNECTION WITH OR RELATED TO THE PLAN, INCLUDING BUT NOT LIMITED TO THE LETTER
OF INTENT, THE PURSUIT OF APPROVAL OF THE DISCLOSURE STATEMENT OR THE
SOLICITATION OF VOTES FOR CONFIRMATION OF THE PLAN, EXCEPT FOR WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE AS DETERMINED BY A FINAL ORDER, AND, IN ALL
RESPECTS, SHALL BE ENTITLED TO RELY UPON THE ADVICE OF COUNSEL WITH RESPECT TO
THEIR DUTIES AND RESPONSIBILITIES UNDER THE PLAN. THIS EXCULPATION SHALL BE IN
ADDITION TO, AND NOT IN LIMITATION OF, ALL OTHER RELEASES, INDEMNITIES,
EXCULPATIONS AND ANY OTHER APPLICABLE LAW OR RULES PROTECTING SUCH RELEASED
PARTIES FROM LIABILITY.
47
Trenwick America Corporation
Exhibit 99.1
(b) INJUNCTION. PURSUANT TO SECTION 105 OF THE BANKRUPTCY CODE, NO
HOLDER OR PURPORTED HOLDER OF AN ADMINISTRATIVE CLAIM, CLAIM OR INTEREST SHALL
BE PERMITTED TO COMMENCE OR CONTINUE ANY ACTION, EMPLOYMENT OF PROCESS, OR ANY
ACT TO COLLECT, OFFSET, OR RECOVER ANY CLAIM THAT HAS BEEN RELEASED OR WAIVED
PURSUANT TO SECTION 7.05 ABOVE AGAINST A RELEASED PARTY THAT ACCRUED ON OR PRIOR
TO THE EFFECTIVE DATE.
(c) Limitation of Government Releases. Notwithstanding Section 7.07
of the Plan, the Plan shall not release, discharge, or exculpate any non-Debtor
party from any debt owed to the U.S. Government and/or its agencies (the
"Government"), or from any liability arising under the Internal Revenue Code,
the Employee Retirement Income Security Act of 1974, as amended, or the
environmental laws, securities laws or criminal laws of the United States. In
addition, notwithstanding Section 7.09(b) of the Plan, the Plan shall not enjoin
or prevent the Government from collecting any such liability from any such
non-Debtor party.
(d) Term of Bankruptcy Injunction or Stays. All injunctions or stays
provided for in the Chapter 11 Case under sections 105 or 362 of the Bankruptcy
Code, or otherwise, and in existence on the Confirmation Date, shall remain in
full force and effect until the Effective Date.
ARTICLE VIII.
EXECUTORY CONTRACTS
Section 8.01. Executory Contracts and Unexpired Leases. As of the
Effective Date, all executory contracts and unexpired leases of the Debtor shall
be deemed rejected by the Debtor pursuant to the provisions of section 365 of
the Bankruptcy Code, except: (a) any executory contract or unexpired lease that
has been or is the subject of a motion to assume or assume and assign filed
pursuant to section 365 of the Bankruptcy Code by the Debtor before the
Effective Date; (b) any executory contract or unexpired lease listed in the
"Schedule of Assumed and Assigned Executory Contracts and Unexpired Leases" to
be Filed by the Plan Proponents as part of the Plan Supplement; (c) any
executory contract or unexpired lease assumed or assumed and assigned pursuant
to the provisions of this Plan; and (d) any agreement, obligation, security
interest, transaction or similar undertaking that the Plan Proponents believe is
not executory or is not a lease, and which is later determined by the Bankruptcy
Court to be an executory contract or unexpired lease that is subject to
assumption or rejection under section 365 of the Bankruptcy Code.
Section 8.02. Cure. At the election of the Plan Proponents, any monetary
defaults under each executory contract and unexpired lease to be assumed under
this Plan shall be satisfied pursuant to section 365(b)(1) of the Bankruptcy
Code, in one of the following ways: (a) by payment of the default amount in Cash
on the Effective Date; or (b) on such other terms as agreed to by the parties to
such executory contract or unexpired lease. In the event of a dispute regarding:
(i) the amount of any cure payments; (ii) the ability of the Debtor to provide
adequate assurance of future performance under the contract or lease to be
assumed; or (iii) any other matter pertaining to assumption, then the cure
payments required by section 365(b)(1) of the
48
Trenwick America Corporation
Exhibit 99.1
Bankruptcy Code shall be made following the entry of a Final Order resolving the
dispute and approving assumption.
Section 8.03. Rejection Damages Bar Date. If the rejection by the Debtor,
pursuant to the Plan or otherwise, of an executory contract or unexpired lease,
results in a Claim, then such Claim shall be forever barred and shall not be
enforceable against the Debtor, New TAC, the Litigation Trust or the property of
any of them unless a Proof of Claim is filed with the clerk of the Bankruptcy
Court and served upon counsel to the Plan Proponents, and the Claims Agent, on
or before the earlier of: (i) the later of the applicable Bar Date or within
thirty (30) days after the date of service of notice of entry of an order of the
Bankruptcy Court authorizing such rejection, including the Confirmation Order,
(ii) thirty (30) days after such rejection becomes effective if such rejection
occurred by reason of expiration of a time period fixed by the Bankruptcy Court,
or (iii) such other period set by the Bankruptcy Court.
Section 8.04. Executory Contracts and Unexpired Leases Entered Into and
Other Obligations Incurred After the Petition Date. Executory contracts and
unexpired leases entered into and other obligations incurred after the Petition
Date by TAC shall be performed by New TAC. Accordingly, such executory
contracts, unexpired leases and other obligations shall survive and remain
unaffected by entry of the Confirmation Order.
ARTICLE IX.
CONDITIONS TO CONFIRMATION AND
OCCURRENCE OF EFFECTIVE DATE
Section 9.01. Conditions to Confirmation and Occurrence of Effective Date.
(a) Conditions to Confirmation. This Plan may not be confirmed
unless each of the conditions set forth below is satisfied. Except as provided
in Section 9.02 below, any one or more of the following conditions may be waived
at any time by the Plan Proponents with the agreement of MBIA and the LoC Bank
Group.
(1) The Disclosure Statement Order shall have been entered and
be a Final Order; and
(2) The Confirmation Order shall have been entered.
(b) Conditions to Occurrence of Effective Date. The Effective Date
for this Plan may not occur unless each of the conditions set forth below is
satisfied. Except as provided in Section 9.02 below, any one or more of the
following conditions may be waived at any time by the Plan Proponents.
(1) The Confirmation Order shall have become a Final Order;
(2) All authorizations, consents and regulatory approvals
required (if any) for the Plan's effectiveness shall have been obtained;
(3) All settlements embodied in the Plan shall have been
approved;
49
Trenwick America Corporation
Exhibit 99.1
(4) All documents included in the Plan Supplement (in a form
satisfactory to the Plan Proponents) shall have been executed and approved;
(5) The Restructuring Transactions, if determined necessary by
the Plan Proponents, shall have been consummated;
(6) The Litigation Trustee(s) shall have been appointed and
the Litigation Trust shall have been established and funded;
(7) The New Indentures shall have been qualified under the
Trust Indenture Act; and
(8) The Prepetition Claim of Trenwick (Barbados) shall have
been disallowed or settled under terms satisfactory to the Plan Proponents in
their sole discretion;
(9) Allowed Convenience Claims shall not exceed $20,000 and
the aggregate Cash payments to holders of Allowed CI Notes Claims pursuant to
Section 5.06(a) of the Plan shall not exceed $100,000;
(10) The New Revolver Facility and New Term Loan Facility
shall have been subscribed and funded pursuant to the Rights Offering (which
contains its own conditions to commitment);
(11) A Runoff Manager acceptable to the Plan Proponents and
the Senior Noteholders shall have been retained;
(12) Form A filings under the Insurance Company Holding Acts
of the State of New York and the State of Connecticut, or other appropriate
regulatory body, shall have been filed and approved; and
(13) No order of any court of competent jurisdiction shall
have been entered and shall remain in effect restraining the Debtor or the Plan
Proponents from consummating the Plan.
Section 9.02. Waiver of Conditions to Occurrence of Effective Date. Each
of the conditions to the occurrence of the Effective Date is for the benefit of
the Estate. Other than the requirement that the Confirmation Order must be
entered and that all authorizations, consents and regulatory approvals required
have been obtained, the requirement that a particular condition be satisfied may
be waived in whole or part by the Plan Proponents with the agreement of MBIA and
the LoC Bank Group.
ARTICLE X.
CONFIRMABILITY AND SEVERABILITY
OF A PLAN AND CRAM-DOWN
Section 10.01. Confirmability and Severability of a Plan. The Plan
Proponents, in consultation with the Creditors' Committee, reserve the right to
alter, amend, modify, revoke or
50
Trenwick America Corporation
Exhibit 99.1
withdraw the Plan. The Plan Proponents reserve the right to make non-substantive
changes to the Plan, which changes may be necessary. If the Plan Proponents
revoke or withdraw this Plan, nothing contained herein shall be deemed to
constitute a waiver or release of the Claims by Plan Proponents or by or against
the Debtor, or to prejudice in any manner the rights of the Plan Proponents or
any other persons in any further proceedings involving the Debtor. Each
provision of this Plan shall be considered separable, and, if for any reason any
provision or provisions herein are determined to be invalid and contrary to any
existing or future law, the balance of this Plan shall be given effect without
relation to the invalid provision.
Section 10.02. Cram-down. The Plan Proponents reserve the right to request
the Bankruptcy Court to confirm the Plan in accordance with section 1129(b) of
the Bankruptcy Code if one or more impaired Classes votes to reject the Plan
(provided the other requirements of section 1129 of the Bankruptcy Code are
satisfied).
ARTICLE XI.
ADMINISTRATIVE PROVISIONS
Section 11.01. Retention of Jurisdiction. Notwithstanding confirmation of
this Plan or occurrence of the Effective Date, the Bankruptcy Court shall retain
jurisdiction for all purposes permitted under applicable law, including, without
limitation, the following purposes:
(a) Determination of the estimation or allowability of Claims upon
motion or objection with respect to such Claims by the Debtor in consultation
with the Plan Proponents, the Plan Proponents, or New TAC, as the case may be,
including the determination of any applicable setoff with respect to such
Claims, and the validity, extent, priority and nonavoidability of consensual and
nonconsensual Liens and other encumbrances;
(b) Determination of tax liability pursuant to section 505 of the
Bankruptcy Code;
(c) Approval, pursuant to section 365 of the Bankruptcy Code, of all
matters related to the assumption, assumption and assignment, or rejection of
any executory contract or unexpired lease of the Debtor;
(d) Determination of requests for payment of administrative expenses
entitled to priority under section 507(a)(1) of the Bankruptcy Code, including
compensation of parties entitled thereto under section 330 of the Bankruptcy
Code;
(e) Resolution of controversies and disputes regarding the
interpretation of this Plan;
(f) Implementation of the provisions of this Plan and entry of
Orders in aid of confirmation and consummation of this Plan, including, without
limitation, appropriate Orders protecting the Debtor, New TAC, the Estate and
the Released Parties from actions by creditors and/or shareholders of the Debtor
or any of them, ensuring distributions to holders of Allowed Claims and
resolving disputes and controversies regarding property of the Estate;
51
Trenwick America Corporation
Exhibit 99.1
(g) Modification of (i) the Plan pursuant to section 1127 of the
Bankruptcy Code and (ii) any agreement executed in connection therewith;
(h) Matters relating to the Litigation Trust;
(i) Issuance of orders, if appropriate, as requested by the Debtor,
the Plan Proponents or New TAC under, and subject to, the provisions of
Bankruptcy Rule 2004;
(j) Adjudication, litigation, trial or administration of any Causes
of Action or any matters relating thereto; in this regard, the Bankruptcy
Court's jurisdiction over the subject matter of, or over any Persons that are
parties to, any adjudication, litigation, trial or administration of any Causes
of Action shall be co-extensive with its jurisdiction over such matters and
Persons prior to Plan confirmation;
(k) Adjudication, litigation, trial or administration of any claims,
causes of action, adjudications, cases, lawsuits, litigation, trials and civil
proceedings that arise under title 11 of the United States Code or that arise in
or relate to cases under title 11 of the United States Code; in this regard, the
Bankruptcy Court's jurisdiction over the subject matter of, or over any Persons
that are parties to, any such claims, causes of action, adjudications, cases,
lawsuits, litigation, trials and civil proceedings shall be co-extensive with
its jurisdiction over such matters and Persons prior to Plan confirmation; and
(l) Entry of a Final Order closing the Chapter 11 Case.
Section 11.02. Governing Law. Except to the extent the Bankruptcy Code,
Bankruptcy Rules, or other federal laws apply, except for the adjudication,
litigation, trial of any Causes of Action or any matters relating thereto, and
except for Reinstated Secured Claims governed by another jurisdiction's law, the
rights and obligations arising under this Plan shall be governed by the laws of
the State of New York, without giving effect to the principles of conflicts of
law.
Section 11.03. Dissolution of the Creditors' Committee. On the Effective
Date, the Creditors' Committee shall be dissolved and the members thereof shall
be released and discharged of and from all further authority, duties,
responsibilities and obligations related to, arising from and in connection with
the Chapter 11 Case, and the retention and employment of the Professionals
retained by the Committee shall terminate except as otherwise expressly
authorized pursuant to this Plan.
Section 11.04. Administrative Bar Date.
(a) General Provisions. Except as provided below in Section 11.04(b)
for Administrative Claims of Professionals requesting compensation or
reimbursement of expenses and in Section 4.01 for liabilities incurred by the
Debtor in the ordinary course of its business, requests for payment of
Administrative Claims must be Filed no later than 45 days after the Effective
Date. Holders of Administrative Claims who are required to File a request for
payment of such Claims and who do not File such requests by the applicable Bar
Date, shall be forever barred from asserting such Claims against the Debtor, New
TAC or their respective properties.
52
Trenwick America Corporation
Exhibit 99.1
(b) Professionals. All Professionals or other entities requesting
compensation or reimbursement of expenses pursuant to sections 327, 328, 330,
331, 503(b) and 1103 of the Bankruptcy Code for services rendered before the
Effective Date (including compensation requested by any Professional or other
entity for making a substantial contribution in the Chapter 11 Case) shall File
an application for final allowance of compensation and reimbursement of expenses
no later than 45 days after the Effective Date. Objections to applications of
Professionals or other entities for compensation or reimbursement of expenses
must be Filed no later than 90 days after the Effective Date. All compensation
and reimbursement of expenses Allowed by the Bankruptcy Court shall be paid to
the applicable Professional immediately thereafter. Each Professional that
intends to seek payment for compensation or reimbursement of expenses from the
Debtor (including compensation requested by any Professional or other entity for
making a substantial contribution in the Chapter 11 Case) shall provide the Plan
Proponents with a statement, by no later than the Confirmation Date, of the
amount of estimated unpaid fees and expenses that each such Professional has
incurred or expects to incur through the Effective Date. The Debtor at the
direction of the Plan Proponents or New TAC, as appropriate, shall establish a
reserve in an amount sufficient to satisfy the unpaid fees and expenses of such
Professionals.
(c) Ordinary Course Liabilities. Holders of Administrative Claims
based on liabilities incurred by the Debtor in the ordinary course of business
shall not be required to File any request for payment of such Claims. Such
Administrative Claims shall be assumed and paid by the Debtor or New TAC
pursuant to the terms and conditions of the particular transaction giving rise
to such Administrative Claim, without any further action by the holders of such
Claims or the Bankruptcy Court.
Section 11.05. Payment of Statutory Fees. All fees payable pursuant to
section 1930 of title 28 of the United States Code, as determined by the
Bankruptcy Court on the Confirmation Date, shall be paid on the Effective Date.
Any statutory fees accruing after the Confirmation Date shall be paid in
accordance with this Plan.
Section 11.06. Effectuating Documents and Further Transactions. New TAC
and the Litigation Trustee(s), as appropriate, shall be authorized pursuant to
section 1142 of the Bankruptcy Code to execute, deliver, file, or record such
documents, contracts, instruments, and other agreements and take such other
action as may be necessary to effectuate and further evidence the terms and
conditions of the Plan.
Section 11.07. Successors and Assigns. The rights, benefits, and
obligations of any Person named or referred to in the Plan shall be binding
upon, and shall inure to the benefit of, the heir, executor, administrator,
successor or assign of such Person, but as for any releases provided hereunder,
only in their capacity as such.
Section 11.08. Early Assignment of Causes of Action. To the extent that
the Plan Proponents file a notice with the Court notifying the Court that any
delay in the Effective Date of the Plan is potentially jeopardizing the value of
any of the Causes of Action, as a result for example of potential statute of
limitations issues, the Court may thereafter upon application by the Debtor or
the Plan Proponents, on ten (10) days notice, or such shorter notice as
necessary and after a hearing on the matter to preserve the Causes of Action,
enter any orders necessary to
53
Trenwick America Corporation
Exhibit 99.1
assign and transfer the Causes of Action and/or otherwise provide standing to
the Plan Proponents, as appropriate, prior to the Effective Date, with the Plan
Proponents having all rights and powers with respect to the Causes of Action
that would otherwise be given to the Litigation Trustee(s) upon the Effective
Date. Upon such orders, the Plan Proponents shall obtain the benefit of
bankruptcy tolling provisions or extensions, including those set forth in
sections 108, 546, 549 and 550 of the Bankruptcy Code. If the Causes of Action
are assigned and/or standing is otherwise provided to the Plan Proponents in
accordance with this provision, such Causes of Action will automatically vest in
the Litigation Trustee(s) upon the Effective Date in accord with the above
provisions.
Section 11.09. Close of Case. For purposes of section 546(a), 549(d) and
550(f) of the Bankruptcy Code, the Chapter 11 Case shall be deemed closed on the
date that the Bankruptcy Court enters a Final Order closing the Chapter 11 Case.
Section 11.10. Confirmation Order and Plan Control. To the extent the
Confirmation Order and/or this Plan is inconsistent with the Disclosure
Statement, any other agreement entered into between or among the Debtor and any
third party, this Plan controls the Disclosure Statement and any such
agreements, and the Confirmation Order (and any other orders of the Bankruptcy
Court) controls this Plan.
Section 11.11. Headings. Headings are used in this Plan for convenience
and reference only, and shall not constitute a part of this Plan for any other
purpose.
Section 11.12. Notices. Any notice required or permitted to be provided
under the Plan shall be in writing and served by either (a) certified mail,
return receipt requested, postage prepaid, (b) hand delivery or (c) overnight
delivery service, freight prepaid, and addressed as follows:
For the Plan Proponents
Weil, Gotshal & Manges LLP
200 Crescent Court, Suite 300
Dallas, TX 75201
(214) 746-7700
Attn: Martin A. Sosland, Esq.
Stephen A. Youngman, Esq.
and
Bayard Firm
222 Delaware Avenue, Suite 900
P.O. Box 25130
Wilmington, DE 19899
(302) 655-5000
Attn: Neil B. Glassman, Esq.
54
Trenwick America Corporation
Exhibit 99.1
For the Debtor
Trenwick America Corporation
One Canterbury Green
Stamford, CT 06901
(203) 353-5505
Attn: Mr. Timothy R. Graham, Esq.
with copies to:
Dewey Ballantine LLP
Attorneys for the Debtors
1301 Avenue of the Americas
New York, New York 10019-6092
(212) 259-8000
Attn: Benjamin Hoch, Esq.
Carey D. Schreiber, Esq.
Ashby & Geddes
Attorneys for the Debtors
222 Delaware Avenue, 17th Floor
P.O. Box 1150
Wilmington, Delaware 19899
(302) 654-1888
Attn: Christopher S. Sontchi, Esq.
Don A. Beskrone, Esq.
For the Official Creditors' Committee of Unsecured Creditors
Young Conaway Stargatt & Taylor, LLP
The Brandywine Building
1000 West Street, 17th Floor
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6600
Attn: Brendan L. Shannon, Esq.
Objections to confirmation of the Plan are governed by Bankruptcy Rule
9014. UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED IT WILL NOT
BE CONSIDERED BY THE COURT.
At the Confirmation Hearing, the Court must determine whether the
requirements of section 1129 of the Bankruptcy Code have been satisfied and,
upon demonstration of such compliance, the Court will enter the Confirmation
Order.
55
Trenwick America Corporation
Exhibit 99.1
Dated: October 26, 2004
Respectfully submitted,
J. C. WATERFALL
By: /s/ J. C. Waterfall
-------------------------------------
Name:
-----------------------------------
Title: Authorized Agent
----------------------------------
PHOENIX PARTNERS, L.P.
By: /s/ Joann McNiff
-------------------------------------
Name:
-----------------------------------
Title: Authorized Agent
----------------------------------
PHOENIX PARTNERS, II, L.P.
By: /s/ Joann McNiff
-------------------------------------
Name:
-----------------------------------
Title: Authorized Agent
----------------------------------
PHAETON INTERNATIONAL (BVI) LTD.
By: /s/ Joann McNiff
-------------------------------------
Name:
-----------------------------------
Title: Authorized Agent
----------------------------------
TEJAS SECURITIES GROUP, INC. 401(k)
PLAN AND TRUST FBO JOHN J. GORMAN
By: /s/ John J. Gorman
-------------------------------------
Name:
-----------------------------------
Title: Authorized Agent
----------------------------------
56