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reorganization, the financial statements of just the top U.S. subsidiary indicated that it

had a positive asset value of over $200 million.

In 2003, the holding company had to place its insurance operations in run-off

globally. The holding company and its top U.S. subsidiary filed for bankruptcy. The

cause of the failure was that the claims made by the insureds against the holding

company’s operating subsidiaries (including the insureds of the companies it had

acquired) exceeded estimates and outstripped the holding company’s capacity to service

the claims and its debt.

The reorganization plan for the top U.S. subsidiary resulted in the creation of a

Litigation Trust. That Trust was assigned all the causes of action that the U.S. subsidiary


The Litigation Trust then brought this case. The essential premise of its claims is

that the majority independent board of the holding company engaged in an imprudent

business strategy by acquiring other insurers who had underestimated their potential

claims exposure. As a result of that imprudent strategy, the holding company and its top

U.S. subsidiary were eventually rendered insolvent, to the detriment of their creditors.

Not only that, because the top U.S. subsidiary took on obligations to support its parent’s

debt and actually assumed some of that debt, the top U.S. subsidiary and its creditors

suffered even greater injury than the holding company and its creditors.

Although the complaint is full of inflammatory adjectival assaults on the motives

of the holding company board, they are all of an entirely conclusory and unsupported

nature. No pled facts suggest any plausible motive on the part of the holding company’s


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