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business for which it had unreasonably small capital, or intended to incur debts beyond

its ability to pay.

Both state law and federal law provide a panoply of remedies in order to protect

creditors injured by a wrongful conveyance, including avoidance, attachment,

injunctions, appointment of a receiver, and virtually any other relief the circumstances

may require.84 In a fraudulent conveyance suit challenging the reorganization, Trenwick

itself would have been a proper defendant — as the supposed beneficiary of the

fraudulent transfers from Trenwick America — and the creditors of Trenwick America

would have had direct standing to prosecute an action.

The law of fraudulent conveyance is, of course, not the only or primary protection

for creditors. The financial creditors of companies like Trenwick and Trenwick America

know how to craft contractual protections that restrict their debtors’ use of assets. In a

situation when creditors cannot state a claim that such contractual protections have been

breached and cannot prove a fraudulent conveyance claim, the creditors’ frustration does

not mean that there is a gap in the remedial fabric of the business law that equity should

fill. Rather, it means that we remain a society that recognizes that reward and risk go

together, and that there will be situations when business failure results in both equity and

debt-holders losing some money. As this court has said:

Having complied with all legal obligations owed to the firm’s creditors, the board would . . . ordinarily be free to take economic risk for the benefit of the firm’s equity owners, so long as the directors comply with their



. § 1307; 11 U.S.C. §§ 544, 548. Other common remedies available to injured

creditors are replevin, sequestration, constructive trust, equitable liens, and garnishment.


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