Eva Post #357
My letter 2003 to Trustee!!
Dear Mr. MacMahon,
I am writing to request that the Trustee appoint an equity committee in accordance with 11 U.S.C. § 1102(a)(1) for the shareholders of two insurance holding companies, Trenwick Group Ltd. and LaSalle Re Holdings Limited. These companies recently filed for voluntary Chapter 11 reorganization in conjunction with Trenwick America Corporation, and the proceedings have been consolidated.
I own 448,000 shares of Trenwick common stock. I am writing on my own behalf as a shareholder. I am not representing any other person in this matter. I am currently seeking bankruptcy counsel to assist me in evaluating my alternatives, but based on my relatively small holdings, I cannot afford to obtain adequate counsel independently.
Based on a preliminary review of publicly available information, it appears to me that an equity committee is necessary to achieve adequate representation for equity holders in this case. Three factors generally relevant in this determination are (1) the number of shareholders, (2) the complexity of the case, and (3) whether the cost of an additional committee significantly outweighs the need for adequate representation. In re Wang Laboratories, Inc., 149 B.R. 1, 2 (Bk.E.D.Mass. 1992)
First, the number of equity holders is large. Based on publicly available information, I believe most of the equity is currently held by individual investors who do not appear to be directly affiliated with any large financial institution. These small holders, like me, are not likely to be able to obtain adequate legal or financial advice in this matter except through some form of committee representation.
Second, the reorganization plan is extremely complex. Three holding companies and numerous regulated subsidiary entities are involved, with concurrent proceedings in Bermuda and possibly also the UK. The
plan involves the creation of additional entities, the sale of key assets, provisions for repayment of intercompany debt, and a long period of regulated operation during which insurance claims will be paid from existing reserves.
Finally, the cost of an additional committee does not outweigh the need for adequate representation of equity holders. The Debtors in this case do not appear to be so hopelessly insolvent that formation
of an equity committee would be a waste of time and funds from the Debtor's estate. See In re Williams Communications Group, Inc., 281 B.R. 216, 220 (2002). Based on publicly available information, the
current book value of all three Debtors appears to be positive. In addition, it appears that a reorganization plan has already been worked out with the largest classes of secured and unsecured creditors, and that this plan includes provisions for distributing residual assets to equity holders, although such distribution may not take place for many years.
The appointment of an equity committee would likely have a cost to the bankruptcy estate, but this cost is necessary to ensure adequate representation. Because of the potential conflicts between debt and equity interests over the long period of time contemplated in the plan, it is unlikely that a blended committee would provide adequate representation for equity holders, even assuming such a committee is authorized by statute. Given the large number of small equity holders, committee representation is the most reasonable and efficient way to assist equity holders in evaluating whether the reorganization plan is in their best interests, and to allow them to protect their interests if necessary. Equity holders would have a strong incentive to keep costs reasonable, since any equity distribution would be made from residual funds after all other classes of creditors have been paid.
I would be willing to consider serving on an equity committee if the Trustee were to appoint such a committee. If necessary, I believe I could provide a list of additional equity holders willing to serve on a committee. Although I am not representing any person or group in a legal capacity, I am in contact with other shareholders and I plan to help organize other shareholders in the event we are able to obtain committee representation.
Sincerely,
Eva Nizzali Milano, li 26 August 2003
Via delle rogge 20
20084
Lacchiarella
Milano Eva Nizzali
Italy
