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its creditors. To carry out this feckless plan, Trenwick employed the defendant advisors,

who provided intentionally erroneous or at least negligent advice that facilitated the

implementation of a foolish business strategy, which ultimately worked harm to

Trenwick America as an entity and its creditors.

As a matter of characterization of claims, the Litigation Trust alleges that the

Trenwick directors breached their fiduciary duties of care and loyalty by this conduct —

duties that the Litigation Trust alleges were owed to the creditors of Trenwick and its

subsidiaries because Trenwick and its subsidiaries were insolvent. As a component of

this breach, the Trenwick directors supposedly engaged in fraud by concealing and

misstating the facts regarding the nature and effects of the expansion strategy.

The Trenwick America directors are accused of identical conduct and conspiring

with the Trenwick directors. As to them, however, the Litigation Trust makes the

argument that they faced a conflict the Trenwick directors did not — a conflict among the

constituencies of Trenwick America. That is, the Trenwick America directors are alleged

to have injured the creditors of Trenwick America by causing its assets to be pledged to

support other subsidiaries owned by Trenwick, at a time when Trenwick America was

insolvent. For that reason, the Trenwick America directors are alleged to have violated

their fiduciary duties, because the focus of the Trenwick America board had to be solely

upon making sure Trenwick America could satisfy as many of the legal claims of its

creditors as possible, with the equity owner and parent, Trenwick, being out of the picture

as a result of its corporate child’s insolvency. In addition, the Trenwick America

directors are accused in a separate count of the supposed tort of “deepening insolvency”


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