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