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June 25, 2019 at 06:59 PM
A group of former traders and managers at American International Group Inc. won a London judge’s backing in their battle to obtain $100 million dating back to the financial crisis, after he said that the insurance giant couldn’t put forward “abusive” arguments to block the payments.
Judge Andrew Baker said Tuesday that the insurer can’t assert that its AIG Financial Products unit would have rather gone bankrupt than pay the bonuses to the 23 ex-employees. An earlier ruling said the unit improperly withheld the payments, and the insurer wanted to make the case for bankruptcy in a new trial deciding the damages.
The lawsuit comes out of the upheaval of the financial crisis, when governments clashed with bailed-out banks and insurers to stop them from paying bonuses. At stake is more than $100 million in bonuses, sums that were set aside through a deferred compensation program that provided for “a sharing of the risks and rewards” of the business.
AIG Financial Products chief William Dooley had said in a court filing that the insurance giant would have “been under extreme pressure” from the United States, especially from an angry Federal Reserve Chairman Ben Bernanke, to stop the payouts and pursue bankruptcy instead.
(Related: AIG Returns to CLO Market With First Post-Crisis Deal)
“It would be a most unseemly process to explore that now with Mr. Dooley,” the judge said in his decision.
It was an argument that should never have been put forward, said Daniel Oudkerk, a lawyer for the group of former staff.
“In order to spite the employees, they would in fact have gone bankrupt rather than paid,” he said.
