holds true even in cases where a creditor has assigned her claims to a trustee or Trust,65
which is not the situation here.
For all the reasons described, the Litigation Trust therefore lacks standing to
pursue direct claims on behalf of Trenwick America’s creditors. Therefore, the Litigation
Trust’s complaint must be analyzed solely from the perspective of whether it pleads
viable claims belonging to Trenwick America itself as an entity.
B. The Litigation Trust Fails To State A Claim Against The Former Directors Of Trenwick
Analytical clarity is served by first examining the Litigation Trust’s claim that the
Trenwick board of directors breached its fiduciary duties by approving the Chartwell and
LaSalle mergers and the reorganization of Trenwick. That claim is a quite unusual one.
Remember that the Litigation Trust only has the ability to assert a claim that
Trenwick America possesses. Therefore, this claim depends on the notion that the
directors of a corporate parent — Trenwick — breached fiduciary duties owed to the
parent’s wholly-owned subsidiary — Trenwick America. But that notion is at odds with
our state’s law. Under settled principles of Delaware law, a parent corporation does not
owe fiduciary duties to its wholly-owned subsidiaries or their creditors.66
, 336 F.3d 94 (2d Cir. 2003) (explaining that the
assignment of creditors’ claims did not confer standing on the trustee);
, 859 F.2d at
666-67 (holding that the trustee could not bring claims of creditors although the creditors had
66 assigned the claims); ,
, 241 B.R. 491, 499-502 (Bankr. D. N.H. 1999). , 545 A.2d 1171, 1174 (Del. 1988).
Although it is said in general terms that a parent corporation owes a fiduciary obligation to its subsidiaries, this obligation does not arise as such unless the subsidiary has minority
DAVID A. DREXLER, LEWIS S. BLACK, JR., & A. GILCHRIST SPARKS, III,
DELAWARE CORP. LAW AND PRACTICE § 15.11, at 15-72 (2002).