AIG is making an attempt to restrict bonus funds to former executives by inserting out of business the unit that triggered one of many largest bailouts of the 2008 monetary disaster.
The US insurer stated on Wednesday it had put AIG Monetary Merchandise into Chapter 11 chapter. The division’s dangerous bets on credit score default swaps had been on the coronary heart of the US authorities’s $182bn bailout 14 years in the past.
Since then, AIG has been battling a gaggle of former AIG FP executives within the US and UK, who declare they’re owed hundreds of thousands of {dollars} in bonuses.
In its submitting, AIG stated that the proposed reorganisation of AIG FP would restrict the general bonus pool to $1mn for 46 executives.
“The phrases of the deferred compensation plans present that upon a chapter submitting by FP, any monetary obligation of FP underneath the deferred compensation plans is subordinate to all different liabilities of FP,” the corporate stated.
“Pursuant to the phrases of the Plan of Reorganization, the one funds accessible to the 46 former FP executives to extinguish their claims can be an equal share in a restricted pool of $1mn.”
Shortly after the crisis-era bailout, AIG confronted an outcry within the US by persevering with to pay bonuses to some FP workers. London-based executives introduced a case in English courts in 2014.
Their declare sought greater than $100mn in bonuses and it was estimated {that a} additional $800mn could possibly be claimed by former US workers. The London-based executives’ case was profitable on the Excessive Court docket, however AIG finally won on appeal.
The insurer stated within the submitting that it had resolved all lawsuits aside from one pending in a Connecticut state court docket, which was introduced in 2019 and was “essentially an identical” to the English case.
AIG is the biggest remaining creditor to Connecticut-based FP, which has no workers or materials operations. The unit nonetheless owes important quantities to the broader insurance coverage group within the type of intercompany loans that had been funded by the federal government bailout, which was finally recouped by the taxpayer.
The chapter submitting would have “no web affect” on AIG’s monetary statements, the insurer stated, provided that the unit and the broader group’s disastrous bets had been recognised in its 2008 monetary statements.
Since then, AIG has been engaged in an on-off restructuring, promoting property in areas resembling plane leasing and shopper finance. In September, it floated its life insurance coverage and asset administration enterprise, rebranded as Corebridge Financial, elevating $1.7bn.
