Edward Liddy testifies before a subcommittee of the House Financial Services Committee in Washington on March 18, 2009. Photographer: David Brody/Bloomberg Edward Liddy is shown here testifying at a hearing held in 2008. (Photo: David Brody/Bloomberg)

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.

In 2007 and 2008, AIGFP struggled with liquidity. The company’s problems are now seen as part of the events that culminated in the financial crisis in late 2008, and the 2007-2009 Great Recession. The Federal Reserve initially lent $85 billion to AIG, and in a letter to incoming CEO Edward Liddy, then-New York Attorney General Andrew Cuomo said that the company had agreed “no funds will be distributed” out of AIGFP’s bonus pools on the basis that “these pools should not be used to reward executives ahead of taxpayers.”

But the binding contracts still called for a payout, the judge ruled in November. Even as AIGFP realized losses totaling $40 billion in late 2008, “the language required for the restoration of payments.”

AIG is separately appealing that decision at a higher court, arguing that it didn’t have to pay the traders while the unit was still losing money.

The ruling follows a victory by two former AIG employees in France who got awards totaling about $10 million after French judges chastised the insurance giant for trying to avoid paying bonuses.

The Paris court of appeals in March ordered the insurer to pay bonuses worth more than 2 million euros ($2.3 million) to Marc Alperovitch, a former managing director at AIG Management France SA. The AIG unit had no right to withhold the payments, the judges said. That mirrored a ruling last year awarding 6.7 million euros to Amos Benaroch, who had also been a managing director at the unit.

The British case is Tobias Gruber & Ors v. AIG Management France, SA & Anr, High Court of Justice, Queen’s Bench Division, case no. CL-2014-000921

— Read AIG Rules Out 2008 Management Bonuson ThinkAdvisor.

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