AIG Financial Products (FP) filed for bankruptcy and restricted the recovery of former executive bonuses

MADRID, 14 (EUROPA PRESS)

American International Group (AIG) has reported that its subsidiary AIG Financial Products (FP), the business unit that brought an insurer to the brink of bankruptcy during the financial crisis and led to an entity’s bailout, has filed a voluntary application for reorganization under Chapter 11 of the American bankruptcy law. Union, which will allow progress in liquidation without affecting business.

AIG has determined that this reorganization process will not have a material impact on the company’s consolidated balance sheet, and allows the liquidation of its subsidiaries by AIG to be completed, “a process which has been ongoing since the 2008 financial crisis”.

In this regard, AIG recalls that “tens of billions of dollars” losses by Financial Products in the financial crisis led to the need to solicit public bailouts in 2008, which exceeded $182,000 million (172,000 million euros).

“A special independent committee of FP’s board of directors determined that the presentation and reorganization plan presented the best way forward for completing FP’s liquidation,” the insurer explained, adding that this subsidiary currently has neither operations nor essential businesses nor employees. .

Similarly, it has been indicated that, although the subsidiary has been the target of numerous financial crisis-related lawsuits since 2008, currently only one of these legal disputes is still pending.

Specifically, pending litigation was filed in late 2019 in Connecticut (United States) by 46 former AIG Financial Products executives seeking to recover revenue-sharing bonuses they claimed were entitled to them under the compensation plan. .

In this case, FP argued, as it had in a similar suit in the UK, that under the terms of the deferred compensation plan, the company’s former executives were not entitled to any recovery because FP never made a profit after their loss. dollar in a financial crisis.

Similarly, it pointed out that the terms of the deferred compensation plan stipulated that following FP’s declaration of bankruptcy, any financial obligations of a subsidiary under it were “subordinated to all of FP’s other obligations”, which would have reduced the funds available to cover the claims of the 46 former executives. FP on an equal share of a limited pool of $1 million.

AIG’s rescue on September 15, 2008, along with the bankruptcy of Lehman Brothers, became one of the hallmarks of the financial crisis and led to public assistance received leaving control of the United States Treasury in the hands of 92% of the entity’s shareholders.