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consummated, leave Trenwick America unable to satisfy its creditors. As a result, the

Litigation Trust cannot base a claim on the idea that the Trenwick America directors

owed fiduciary obligations to Trenwick America’s creditors at the time of the challenged

transactions. Because the complaint fails to support an inference of insolvency, the

Trenwick America directors were free to manage Trenwick America for the best interests

of Trenwick, and to follow loyally the direction of Trenwick’s board as to what

Trenwick’s best interests were. The reality that the parent’s strategy ultimately turned

out poorly for itself and its subsidiaries does not buttress a claim by the subsidiary that

the subsidiary’s directors acted culpably by implementing the parent’s prior wishes.

In this respect, it is notable that the charter of Trenwick America did not contain

an exculpatory charter provision. The reasons why it did not are not clear, but one might

be that Trenwick, as sole stockholder and the entity on behalf of whom the subsidiary

was to be run, wanted to reserve the right to fault the Trenwick America directors if they

breached an obligation of due care they owed as subsidiary directors. In the usual course,

Trenwick, as sole owner, could exercise its control over Trenwick America to press any

derivative claims. That Trenwick America has become bankrupt and its claims are now

controlled by the Litigation Trust cannot act as a basis to retroactively impose procedural

duties upon the Trenwick America board it did not bear at the time of the challenged

transactions. In other words, because the Trenwick America board, as directors of a

wholly-owned subsidiary, was entitled to follow the parent’s instructions unless those

instructions required the board to violate the legal rights of others, no due care claim may


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