Initially, I will consider exactly whose claims the Litigation Trust may press in
this litigation. Once I do that, I will consider whether the Litigation Trust has stated a
claim for breach of fiduciary duty against the Trenwick and Trenwick America directors.
Then, I will determine whether Delaware law recognizes as an independent cause of
action an assertion that fiduciaries “deepened” the insolvency of an entity. After that, I
will address the viability of the fraud claims brought against the Trenwick and Trenwick
America directors. Finally, I will address the claims brought against the defendants who
were Trenwick advisors.
A. The Litigation Trust Lacks Standing To Pursue Claims On Behalf Of Trenwick America’s Creditors
As a creature of statute and Trenwick America’s chapter 11 plan of reorganization,
the Litigation Trust is entrusted with standing to pursue only certain defined “Causes of
Action.”59 But the Litigation Trust conceives its standing to be more expansive than the
defendants interpret it to be under federal bankruptcy law and Trenwick America’s
governing reorganization plan. The Litigation Trust contends that, under the terms of
Trenwick America’s plan of reorganization, the Trust has standing to pursue claims on
behalf of Trenwick America’s creditors in addition to any claims Trenwick America had
before the filing of its bankruptcy petition. The defendants agree that the Trust has
standing to bring any claims Trenwick America holds, but the defendants disagree that
the Trust has standing to pursue claims on behalf of Trenwick America’s creditors. I find
that the defendants are correct that the Litigation Trust does not have standing to pursue
TAC Second Amended Plan of Reorganization § 6.03; Litigation Trust Agreement § 1.1.