8-K/A

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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K/A

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

Date of report: January 6, 1997
    (Date of earliest event reported)

                         NORTH EAST INSURANCE COMPANY
             (Exact name of registrant as specified in its charter)

            Maine                     0-11184               01-0278387
(State or other jurisdiction of     (Commission          (I.R.S. Employer
 incorporation or organization)      File No.)          Identification No.)
                                                       
                    482 Payne Road, Scarborough, Maine 04074
               (Address of principal executive offices) (Zip code)

Registrant's telephone number:   (207) 883-2232


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ITEM 1.   Change in Control of Registrant.
   
On January 6, 1997, Ballantrae Partners, L.L.C., a Delaware limited liability
company("Ballantrae"), acquired 810,000 shares of Common Stock of North East
Insurance Company ("NEIC" or the "Company") that were beneficially owned by
Bernard D. Gershuny. Purchase of these shares was made pursuant to a Purchase
Agreement dated as of May 14, 1996, as subsequently amended as of August 22,
1996 and December 17, 1996. In its amended Schedule 13D report on file with the
Securities and Exchange Commission, Ballantrae reported that the purchase price
for these shares was $719,250, plus certain fees and expenses of Mr. Gershuny
(not to exceed $30,000), less reasonable expenses (including legal and
accounting fees) incurred by Ballantrae (not to exceed $150,000). At closing,
Ballantrae delivered $568,750 to a Settlement Agent appointed by Ballantrae and
Mr. Gershuny, in satisfaction of amounts due under the Purchase Agreement.
    

The shares purchased from Mr. Gershuny represent approximately 27% of the
outstanding Common Stock of the Company. Mr. Gershuny's shares had been held of
record by Stephen F. Dubord, as Trustee under a Non-Voting Trust Indenture dated
February 3, 1987.

Under applicable law, Ballantrae's purchase of the shares required prior
regulatory approval from the Maine Bureau of Insurance and the New York
Insurance Department. As previously reported, the Company and Ballantrae entered
into a Standstill Agreement, dated August 22, 1996, concerning Ballantrae's
purchase and sale of NEIC stock and certain matters regarding control of the
Company. Based in part on the provisions of the Standstill Agreement, NEIC's
Board of Directors agreed to support Ballantrae's applications for regulatory
approval in Maine and New. The Standstill Agreement is described in a Form 8-K
report of the Company filed August 28, 1996, and a copy of the Agreement is
included as an exhibit to that report.

Ballantrae obtained the requisite regulatory approvals from the Maine Bureau of
Insurance on September 20, 1996 and from the New York State Insurance Department
on November 26, 1996. In each case, approval was granted subject to certain
stated conditions.

On January 6, 1997, on the basis of certain representations from Ballantrae
regarding the satisfaction of all necessary legal and contractual requirements,
NEIC entered into a Termination Agreement to terminate the Non-Voting Trust
Indenture. The other parties to the Agreement are Ballantrae, Mr. Gershuny, and
Mr. Dubord, as Trustee. The Termination Agreement had previously been approved
as to form by the Maine Bureau of Insurance.

Mr. Gershuny is a party to a settlement arrangement among parties

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to two pending legal actions, United States v. Bernard Gershuny and David
Gershuny, (U.S. District Court for the Southern District of New York, 1992) and
The Official Committee of Unsecured Creditors of American Motor Club, Inc. v.
Bernard Gershuny, et al. (U.S. District Court for the Eastern District of New
York, 1992). Under that settlement arrangement, Mr. Gershuny has agreed that the
net proceeds from his sale of NEIC Common Stock will be paid to certain
claimants. The primary claimants are (i) a restitution fund established for
victims of a fraud involving International Tillex Enterprise, Ltd. and (ii) a
committee of unsecured creditors of American Motor Club, Inc.

In anticipation of the closing of the purchase of these shares, Ballantrae and
Mr. Gershuny entered into a Settlement Agreement under which the net purchase
price was paid to a Settlement Agent. Under the Settlement Agreement, the sale
proceeds (net of certain deductions to cover additional expenses incurred by
Ballantrae) are to be paid over to relevant claimants pursuant to (i) final and
non-appealable orders of a court of competent jurisdiction allocating such
proceeds or (ii) a written agreement among Mr. Gershuny, Ballantrae and all
interested parties.

Under the terms of the Standstill Agreement, Ballantrae is entitled to nominate
three members to the Board of Directors of NEIC within 30 days of Ballantrae's
purchase of Mr. Gershuny's shares. Although the Board of Directors has not yet
taken any action with respect to such nominees, it is anticipated that the Board
will take the appropriate actions in the near future.

Additional information regarding the Purchase Agreement, Ballantrae's Form A
application, and the Standstill Agreement is contained in prior Form 8-K reports
of the Company and in Schedule 13D reports by Ballantrae, filed with the
Securities and Exchange Commission.

Item 7.  Financial Statements and Exhibits.

(a), (b) Not applicable.

(c) The following is filed as an exhibit to this report.
   
     99.1 Termination Agreement dated January 6, 1997, among the Company,
     Ballantrae Partners, L.L.C., Bernard D. Gershuny, and Stephen F. Dubord, as
     Trustee under the Non-Voting Trust Indenture dated February 3, 1987.
    


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                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.

                                NORTH EAST INSURANCE COMPANY


Date: January 21, 1997          By: /s/ Graham S. Payne
                                    --------------------
                                    Graham S. Payne
                                    Treasurer and Chief
                                    Financial Officer
                        

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                     INDEX TO EXHIBITS

Exhibit
Number      Description                                 Page
- -------     ---------------------------------------     ----
   
99.1        Termination Agreement dated January 6,
            1997, among the Company, Ballantrae
            Partners, L.L.C., Bernard D. Gershuny,
            and Stephen F. Dubord, as Trustee under
            the Non-Voting Trust Indenture dated
            February 3, 1987.
    

EX-99.1

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                                                                    Exhibit 99.1


              TERMINATION AGREEMENT RE: NON-VOTING TRUST INDENTURE

     This Termination Agreement, entered as of the 6th day of January 1997,
between NORTH EAST INSURANCE COMPANY, a Maine corporation, chartered as an
insurer under the laws of the State of Maine, (hereinafter called "NEIC"), and
BERNARD D. GERSHUNY, of Delray Beach, Florida, (hereinafter "Gershuny"), as
follows:

     WHEREAS, NEIC, Gershuny and Stephen F. Dubord, Esq., as Trustee, entered
into a Non-Voting Trust Indenture (hereinafter the "Indenture") concerning
810,000 shares of capital stock of NEIC (the "Trust Shares") on February 3,
1987; and

     WHEREAS, Gershuny has entered into a Purchase and Sale Agreement with
Ballantrae Partners, LLC (hereinafter "Ballantrae") for acquisition by
Ballantrae of the Trust Shares; and

     WHEREAS, the Maine Bureau of Insurance has issued a Decision and Order
authorizing acquisition of the Trust Shares by Ballantrae subject to certain
terms and conditions referenced therein, including the termination of the
Indenture; and

     WHEREAS, Gershuny and Ballantrae acknowledge that all conditions to closing
of said Agreement have been satisfied or waived; and

     WHEREAS, NEIC and Gershuny have agreed to terminate the Indenture in
connection with the consummation of the transaction contemplated by the Purchase
and Sale Agreement and the Decision and Order; and

     WHEREAS, the Trustee has consented to act under this Termination Agreement
for the purposes herein provided;

     NOW THEREFORE, IT IS AGREED THAT, pursuant to Paragraph 12(c) of the
Indenture, NEIC and Gershuny agree this day to the termination of the Indenture,
subject to the following conditions:

     1) Delivery and exchange of the Trust Certificates for the Trust Shares as
contemplated by Section 5 of the Indenture and transfer of the Trust Shares to
Ballantrae as contemplated by the Purchase and Sale Agreement; and

     2) Payment of accrued but unpaid compensation to the Trustee through the
date the Trust Shares are transferred to Ballantrae in an amount not to exceed
$15,000, such payment to be made by NEIC and Gershuny in equal shares.


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     IN WITNESS WHEREOF, the parties have executed this Termination Agreement as
of the date first written above.
 
                                   North East Insurance Company

                                   /s/ Robert G. Schatz
                                   ----------------------------
                                   By Robert G. Schatz
                                   Its President, CEO


                                   /s/ Bernard D. Gershuny
                                   ----------------------------
                                   Bernard D. Gershuny



                                   SEEN AND AGREED TO:



                                   /s/Stephen F. Dubord
                                   ----------------------------
                                   Stephen F. Dubord, Trustee


                                   Ballantrae Partners, LLC

                                   /s/ Murry N. Gunty
                                   ----------------------------
                                   By Murry N. Gunty
                                   Its Managing Director


                           * * * * * * * * * * * * * *

     Pursuant to Paragraph 12(c) of the Non-voting Trust Indenture, this
Termination Agreement has received prior approval by me on this 23rd day of
December, 1996.

                                   /s/ Brian K. Atchinson
                                   ----------------------------
                                   Brian K. Atchinson,
                                   Superintendent