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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

65

, 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

stockholders.

DAVID A. DREXLER, LEWIS S. BLACK, JR., & A. GILCHRIST SPARKS, III,

DELAWARE CORP. LAW AND PRACTICE § 15.11, at 15-72 (2002).

39

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