AIG bashes suit over swap deal dating back to 1990
American International Group Inc. asked a federal judge to dismiss a case brought against it by a Canadian real estate investment firm concerning a swap deal initiated in 1990.
American International Group Inc. asked a federal judge to dismiss a case brought against it by a Canadian real estate investment firm concerning a swap deal initiated in 1990.
AIG sought dismissal of a suit by Toronto-based Brookfield Asset Management Inc., which contended that the U.S. government’s bailout of AIG last year amounted to a bankruptcy default.
In a motion filed Thursday in the U.S. District Court for the Southern District of New York, AIG said that “not withstanding that AIG and (AIG Financial Products Corp.) have performed all of their obligations under the parties’ swap agreement, have never filed for bankruptcy and continue as going concerns, plaintiffs contend that certain bankruptcy events of default have been triggered under the parties’ standard-form swap agreement. Seizing on AIG’s liquidity concerns in fall 2008, plaintiffs seek to walk away from their $1.2 billion obligation to AIGFP—over $700 million of which has already accrued over the course of 19 years—and to obtain a windfall at the expense of AIG and its stakeholders.”
In its filing, AIG said it is “aware of no other counterparty that has alleged that AIG or any of the numerous other financial institutions that resolved their own liquidity concerns during the fall 2008 downturn have defaulted under swap agreements containing identical or nearly identical provisions.”
“Brookfield is desperately trying to evade a more than $1 billion obligation owed to AIG,” an AIG spokesman said. “We believe Brookfield’s position is without merit and should be rejected.”
Brookfield declined comment.
[This story first ran in Business Insurance, a sister publication to InvestmentNews.]
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