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express assignment of claims is made in that section or any other section of the Litigation

Trust Agreement.

In addition, even if the Litigation Trust Agreement or plan of reorganization did

expressly assign the direct claims of Trenwick America’s creditors to the Litigation

Trust, federal bankruptcy law is clear that litigation trusts do not have standing to pursue

the direct claims of creditors. In

,63 the U.S.

Supreme Court established that bankruptcy trustees and litigation trusts formed as part of

reorganization plans do not have standing to bring direct claims belonging to creditors

under the federal bankruptcy statute.64 The U.S. Supreme Court explained that the

bankruptcy statute authorized bankruptcy trustees or litigation trusts to bring only those

claims belonging to the

at the time of the debtor’s bankruptcy filing, but that it did

not vest with trustees or litigation trusts standing to pursue separate claims belonging to

others, such as the direct claims of individual creditors. The rule articulated in


406 U.S. 416 (1972).


Although the U.S. Supreme Court decided

under the Bankruptcy Act, the adoption of

the U.S. Bankruptcy Code, 11 U.S.C. § 101 et. seq., did not alter the rule articulated in


, 859 F.2d 664, 666 (9th Cir. 1988) (“

remains the law under

the revised bankruptcy code.”); , 816 F.2d 1222, 1227-28 (8th Cir. 1987) (“No trustee, whether a reorganization

trustee as in

or a liquidation trustee . . . has power . . . under the Code to assert general

causes of action . . . on behalf of the bankrupt estate’s creditors.”). The federal courts continue

to rely on



, 274 F.3d 924,

929 (5th Cir. 2001),

, 535 U.S. 1097 (2002) (citing

40 F.3d 890, 892 (7th Cir. 1994); (2d Cir. 1991).


, , 944 F.2d 114, 120


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