Original Jurisdiction in case of William R. Muir, Jr., Acting Insurance Commissioner of the Commonwealth of Pennsylvania v. Transportation Mutual Insurance Company.
Albert J. Strohecker, III, Associate Chief Counsel, with him, Paul Laskow, Chief Counsel, Frank H. Getter and Richard J. Enterline, Assistant Counsels, for plaintiff.
Howard H. Lewis, with him, Hugh J. Hutchison, Sprecher, Felix, Visco, Hutchison & Young, for defendant.
Donald A. Emeigh, Jr., with him, Ralph A. Jacobs and Barbra Shotel, Hoyle, Morris & Kerr, for intervenor, Christiana General Insurance Corporation of New York.
LeRoy E. Perper, with him, Richard M. Jordan, White & Williams, for intervenor, Meridian Bank.
William R. Balaban, with him, Michael A. Dillon, Balaban & Balaban, for intervenor, Skandia America Reinsurance Corporation.
Miles H. Shore, Saul, Ewing, Remich & Saul, for intervenor, Seaboard System Railroad and CSX Transportation.
Henry B. Fitzpatrick, Jr., Liebert, Short, Fitzpatrick & Hirshland, for intervenor, Atlanta International Insurance Company.
Senior Judge Barbieri. Opinion by Senior Judge Barbieri.
[ 107 Pa. Commw. Page 640]
Before this Court are the applications of Meridian Bank (Meridian) and the Department of Insurance (Department) for the issuance of a permanent injunction against certain creditors of Transportation Mutual Insurance Company (Transportation Mutual). Meridian and the Department seek to permanently enjoin creditors of Transportation Mutual who hold standby letters of credit issued by Meridian pursuant to policies of reinsurance with Transportation Mutual from presenting drafts or otherwise drawing down those letters of credit beyond their respective commuted claims against Transportation Mutual as set forth in the Plan of Rehabilitation approved by this Court on March 19, 1987. See Muir v. Transportation Mutual Insurance Company, 105 Pa. Commonwealth Ct. 156, 523 A.2d 1190 (1987). Hearings were held before the undersigned on May 11, 1987, and May 21, 1987, on the applications. A hearing on the Plan of Rehabilitation itself was held before the undersigned on February 12, 1987.
Based upon the evidence submitted before it, the Court finds the following facts. Atlanta International Insurance Company (Atlanta) is a creditor of Transportation Mutual who purchased a policy of reinsurance from Transportation Mutual in 1983. Pursuant to that policy of reinsurance, Transportation Mutual arranged with Central Penn National Bank, now Meridian through merger, to issue an irrevocable letter of credit to Atlanta
[ 107 Pa. Commw. Page 641]
on December 31, 1983 in the amount of $45,659.00.*fn1 The letter of credit provided that it would automatically renew for successive one year terms unless Meridian ...