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such that the Bermudan and English chains would thrive, while leaving a debt-ridden and

diseased American chain to fall into bankruptcy, leaving its creditors unsatisfied. Indeed,

because Trenwick itself remained responsible for the $490 million credit facility, there is

not even a pleading-stage plausibility that such a strategy was embarked upon

consciously. And the fact that Trenwick remained on the hook for the $490 million debt

combines with the reality that it is difficult to conceive how such an unusual strategy

could make sense for Trenwick, as a public company, even if Trenwick America’s failure

could be cabined, without recourse to Trenwick by Trenwick America’s creditors. In that

scenario, Trenwick would have to come out a financial winner after entirely losing its

invested capital in all its U.S. operations and after suffering great injury to its global

credibility as an insurance provider and as a borrower by seeing its largest operations fall

into the disrepute of bankruptcy.

Finally, it is important to point out that my refusal to conclude that a wholly-

owned subsidiary may sue the directors of its parent company on the premise that their

improvident business strategies ultimately led to the bankruptcy of the subsidiary does

not leave open a gap in the law. There is no chasm.

The laws of all states and the federal bankruptcy laws address precisely the

scenario the Litigation Trust contends occurred in the reorganization but fails to plead.

They do so through a body of law that might be fairly called the “law of fraudulent


78 While most states have adopted the more expansive Uniform Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act is still law in some states while a few remaining states


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